2025 (1) TMI 407 - HC - GST

Challenge to impugned order passed by the respondent - Difference in outward supply between GSTR 3B and Books of accounts - Non filing of returns in FORM GSTR 9 9C - Non-payment of tax under RCM for the freight charges - Non-payment of tax for the private coaching fee receipts - HELD THAT - Petitioner submits that they would pay the balance remaining out of the 25% after deducting the monies which is stated to have been paid, which was not objected to by the learned Additional Government Pleader for the respondent who would seek the liberty of this Court to verify if the above statement is correct. On complying with the above conditions, the impugned order of assessment shall be treated as show cause notice and the petitioner shall file their objections within a period of four weeks from the date of receipt of a copy of this order. Petition disposed off.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

• Whether the impugned order dated 30.08.2024, related to the assessment year 2018-19, was validly issued by the respondent authority.
• Whether the discrepancies found during the audit inspection, such as differences in outward supply between GSTR 3B and the books of accounts, non-filing of returns in FORM GSTR 9 & 9C, and non-payment of tax under RCM for freight charges and private coaching fee receipts, were adequately addressed by the petitioner.
• Whether the petitioner was given a fair opportunity to respond to the show cause notice and the reminder notices issued by the respondent authority.
• Whether the procedural requirements for serving notices were met, and if the petitioner was aware of the proceedings initiated against them.
• Whether the petitioner should be allowed another opportunity to present their case before the adjudicating authority.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of the Impugned Order

• Relevant legal framework and precedents: The assessment was conducted under the Goods and Services Tax Act, 2017, specifically under Sections 73 and 74, which pertain to the determination of tax liability and penalties.
• Court's interpretation and reasoning: The court considered whether the procedural aspects of issuing notices and conducting hearings were adhered to by the respondent authority.
• Key evidence and findings: The petitioner argued that they were not properly informed of the proceedings due to the notices being uploaded on the GST Portal rather than being served directly.
• Application of law to facts: The court noted that the petitioner was not given adequate opportunity to present their case due to the manner of notice service.
• Treatment of competing arguments: The respondent's counsel did not object to the petitioner's willingness to pay 25% of the disputed tax, indicating a potential resolution.
• Conclusions: The court set aside the impugned order, allowing the petitioner another opportunity to respond to the allegations.

Issue 2: Addressing Discrepancies Found During Audit

• Relevant legal framework and precedents: The discrepancies were evaluated under the provisions of the GST Act, which mandates accurate filing and payment of taxes.
• Court's interpretation and reasoning: The court acknowledged the petitioner's submission that they had paid the tax liability immediately after the inspection.
• Key evidence and findings: The petitioner had filed a reply and paid the tax liability through DRC 03 challan.
• Application of law to facts: The court considered the petitioner's compliance post-inspection as a mitigating factor.
• Treatment of competing arguments: The petitioner sought a chance to clarify discrepancies, which the court found reasonable.
• Conclusions: The court allowed the petitioner to file objections and provided a framework for further proceedings.

Issue 3: Fair Opportunity to Respond

• Relevant legal framework and precedents: Principles of natural justice require that parties be given a fair chance to present their case.
• Court's interpretation and reasoning: The court found that the petitioner was not given a fair opportunity due to improper notice service.
• Key evidence and findings: The notices were uploaded online, and the petitioner claimed unawareness of the proceedings.
• Application of law to facts: The court deemed the notice service method insufficient for ensuring the petitioner's awareness.
• Treatment of competing arguments: The court balanced the need for procedural fairness with the respondent's right to enforce tax laws.
• Conclusions: The court directed the respondent to verify the petitioner's claims and allowed the petitioner to file objections.

3. SIGNIFICANT HOLDINGS

• Preserve verbatim quotes of crucial legal reasoning: "In view thereof, the impugned order passed by the respondent dated 30.08.2024 is hereby set aside and this Court is inclined to pass the following orders..."
• Core principles established: The judgment underscores the importance of proper notice service and the opportunity to be heard in tax proceedings.
• Final determinations on each issue: The court set aside the impugned order, allowed the petitioner to file objections, and instructed the respondent to verify the petitioner's claims regarding tax payments.

The judgment emphasizes procedural fairness and the right to a fair hearing, directing the respondent to ensure compliance with these principles in future proceedings.