2024 (12) TMI 920 - HC - GST

Challenge to impugned assessment order - impugned order traverses beyond the show cause notice - violation of principle of natural justice - contrary to the mandate under Section 75(7) of the GST Act - it was submitted by the respondent that inasmuch as the petitioner's status as intermediary was set out in the impugned order for the first time which resulted in the increase in the demand of taxes and the consequential interest and penalty in the impugned order being in excess of the amount specified in the notices - HELD THAT - The impugned order dated 31.08.2024 is set aside. It is open to the petitioner to submit their reply within a period of 3 weeks from the date of receipt of a copy of this order. If for any reason the petitioner does not file their reply within the stipulated period i.e., 3 weeks from the date of receipt of a copy of this order, the impugned order of assessment shall stand restored. Petition disposed off.

Summary

Issues:
Challenge to assessment order based on violation of natural justice and GST Act provisions.

Analysis:
The petitioner, a private limited company offering non-vessel operating common carrier services, filed a writ petition contesting an assessment order dated 31.08.2024. The petitioner, registered under the GST Act, had discrepancies in their return, including under-declaration of output tax, excess claim of Input Tax, and other issues related to Input Tax Credit. A show cause notice was issued on 21.05.2024, and the tax liability was calculated at Rs. 21,77,761/-. The petitioner responded with detailed replies, but the impugned order rejected their claim as Ocean Freight Service providers, treating them as intermediaries instead. Consequently, the interest and penalty were increased to Rs. 96,83,029/-.

The petitioner argued that they were not given a chance to respond to being classified as an intermediary, leading to a significant increase in tax liability, which violated Section 75(7) of the GST Act. Section 75(7) states that the amount demanded in the order should not exceed the amount specified in the notice, and no demand should be confirmed on grounds other than those specified in the notice. The respondent, through their counsel, suggested that the petitioner treat the impugned order as a show cause notice and submit a reply within three weeks.

The court set aside the impugned order dated 31.08.2024 and allowed the petitioner three weeks to submit a reply. If the petitioner fails to respond within the stipulated period, the assessment order will be reinstated. The writ petition was disposed of, and connected miscellaneous petitions were closed.