2025 (1) TMI 1361 - HC - GST

Rejection of appeal on the ground of time limitation - mismatch between GSTR -3B and GSTR-2A - petitioner is ready and willing to pay 25% of the disputed tax and that he may be granted one final opportunity before the adjudicating authority to put forth their objections to the proposal - HELD THAT - The impugned order dated 29.04.2024 is set aside - The petitioner shall deposit 25% of the disputed taxes as admitted by the learned counsel for the petitioner and the respondent within a period of four weeks from the date of receipt of a copy of this order. Petition disposed off.

Summary

ISSUES PRESENTED and CONSIDERED

The primary issue considered by the Court was whether the impugned order dated 29.04.2024, related to the assessment year 2018-19, was valid in light of the petitioner's claims of procedural and substantive errors. Specifically, the Court examined the mismatch between GSTR-3B and GSTR-2A returns, the adherence to procedural requirements under the CGST Act, 2017, and the petitioner's request for a final opportunity to present objections.

ISSUE-WISE DETAILED ANALYSIS

Mismatch Between GSTR-3B and GSTR-2A:

• Legal Framework and Precedents: The case involved the interpretation of Section 16(2) of the CGST Act/TN GST Act, 2017, which outlines conditions for availing input tax credit, including matching of returns.
• Court's Interpretation and Reasoning: The Court noted that the petitioner had failed to substantiate its claims under the relevant sections, leading to the rejection of its reply by the tax authorities.
• Key Evidence and Findings: The discrepancy between GSTR-3B and GSTR-2A was central to the dispute, and the petitioner had been issued notices and reminders to address this mismatch.
• Application of Law to Facts: The Court considered the procedural aspects of issuing notices and the opportunity for the petitioner to respond, concluding that the petitioner was given adequate notice but failed to resolve the discrepancy.
• Treatment of Competing Arguments: The petitioner argued for a chance to rectify the mismatch, citing a recent favorable judgment. The respondent did not object to the petitioner's proposal to adjust the pre-deposit towards the disputed tax.
• Conclusions: The Court decided to set aside the impugned order, allowing the petitioner another opportunity to address the mismatch, contingent upon certain conditions.

Procedural Compliance and Opportunity to Object:

• Legal Framework and Precedents: The procedural requirements under the CGST Act, including the issuance of show cause notices and the opportunity for a hearing, were examined.
• Court's Interpretation and Reasoning: The Court emphasized the importance of procedural fairness, noting that the petitioner had been given opportunities to present its case but had not effectively utilized them.
• Key Evidence and Findings: The timeline of notices and the petitioner's responses were scrutinized, highlighting the petitioner's failure to substantiate its claims adequately.
• Application of Law to Facts: The Court found that while procedural steps were followed by the tax authorities, the petitioner should be granted a final opportunity to present objections, given its willingness to comply with certain conditions.
• Treatment of Competing Arguments: The petitioner's willingness to deposit 25% of the disputed tax was considered a reasonable basis for granting another opportunity to object.
• Conclusions: The Court allowed the petitioner to submit objections to the proposal, treating the impugned order as a show cause notice, subject to compliance with the payment condition.

SIGNIFICANT HOLDINGS

• Verbatim Quotes of Crucial Legal Reasoning: The Court held that "the impugned order dated 29.04.2024 is set aside" and provided detailed conditions under which the petitioner could address the disputed tax issue.
• Core Principles Established: The judgment reinforced the principle of procedural fairness, allowing taxpayers a reasonable opportunity to rectify discrepancies and present objections.
• Final Determinations on Each Issue: The Court determined that the petitioner must deposit 25% of the disputed taxes within four weeks, after which it could submit objections to the assessment. Failure to comply would result in the restoration of the impugned order.

The Court's decision to set aside the impugned order and allow the petitioner another opportunity to address the tax discrepancy underscores the importance of procedural fairness and the opportunity for taxpayers to rectify errors, provided they comply with certain conditions. The judgment balances the need for tax compliance with the rights of taxpayers to be heard and to correct genuine mistakes.