2024 (9) TMI 1464 - HC - GST

Challenge to assessment orders - lack of jurisdiction - discharge of entire duty liability from and out of the ITC availed by the petitioner, at the time of import - HELD THAT - The challenge to the impugned order on the ground that the respondent lack jurisdiction based on the decision of M/S. RASATHE GARMENTS VERSUS THE STATE TAX OFFICER (ST) (INSPN.) , TIRUNELVELI, THE COMMISSIONER OF COMMERCIAL TAXES 2024 (6) TMI 481 - MADRAS HIGH COURT is answered against the petitioner. The respondent is competent to pass the order in terms of above circular. That apart, the Act also does not discriminate between the officer from the Intelligence Wing or the Inspection Wing or the Regular Adjudication Wing. All of them are proper officers for the purpose of issuance of notice under Section 73 or 74 of the respective GST Act. At the same time, it is noticed that the petitioner has not given a clear reply and has suffered an assessment order. It is not open for the petitioner to state that all the information are available and therefore, the impugned order passed by the respondent is liable to be interfered with for failure on the part of the petitioner to get the necessary date / documents. Whenever a show cause notice is issued, it lays a foundation for future orders to be passed and therefore, it is incumbent on the part of an assessee to give a proper reply with proper tabulation, explaining the position with the documents which the petitioner has not done. This Court is inclined to set aside the impugned order, dated 24.04.2024 and remit the case back to the respondent to pass a fresh order on merits, subject to petitioner depositing 10% of the balance amount on the amount other than the defect no.1 relating to 100% adjustment of tax liability from and out of the ITC - The petitioner shall deposit 1% of the tax liability in terms of Section 86 (b) of the respective GST Rules, 2017. For the respective assessment years, the amount shall be deposited by the petitioner within a period of thirty (30) days from today. Petition allowed.

Summary

Issues:
Challenge to assessment orders for the assessment years 2020-21 and 2021-22 based on judgment in M/s.Rasathe Garments case. Discrepancy in input tax credit availed by the petitioner and reflected in Form GSTR-2A. Jurisdiction of the respondent officer to adjudicate the show cause notice. Lack of clear reply from the petitioner leading to assessment order. Proposals for defects in the notice issued to the petitioner.

Analysis:
The petitioner challenged assessment orders for 2020-21 and 2021-22 based on the judgment in M/s.Rasathe Garments case. The petitioner, an importer of coal, claimed to have discharged entire duty liability from input tax credit (ITC) availed. The respondent relied on Form GSTR-2A to propose tax liability, not reflecting IGST paid during import initially. The petitioner argued that the department can levy 1% tax when entire liability is discharged from ITC as per Rule 86(b) of GST Rules, 2017. The petitioner was faulted for not furnishing documents despite inspections, leading to notices issued for the assessment years.

The respondent contended that the M/s.Rasathe Garments case decision does not apply, citing Circular No. 13/2022 clarifying procedures for tax payment and adjudication. The respondent claimed jurisdiction to adjudicate the show cause notice issued in DRC 01. The court considered arguments from both sides and examined the impugned order.

The court found that the respondent had jurisdiction to pass the order based on the circular and observed that the petitioner failed to provide a clear reply, leading to the assessment order. The court emphasized the importance of responding to show cause notices with proper documentation. The court noted that the bulk of the demand was due to discrepancies in input tax credit declaration and GSTR-2A, giving the petitioner an opportunity to explain with relevant documents.

To balance interests, the court set aside the impugned order and directed the respondent to pass a fresh order on merits. The petitioner was instructed to deposit 10% of the balance amount and 1% of the tax liability within 30 days. The petitioner was given 30 days to file a detailed reply to the notice. The impugned order was quashed, and the respondent was directed to issue fresh orders within three months.

In conclusion, both writ petitions were allowed without costs, and connected Miscellaneous Petitions were closed.