2021 (3) TMI 800 - HC - GST

High Court overturns tax liability order under UP GST Act due to lack of evidence

The High Court allowed the petition challenging an order under the Uttar Pradesh Goods and Services Tax Act, 2017. The petitioner, held liable for tax on ... Undisclosed turnover - tax invoice as primary evidence - e-way bill as record on revenue portal - discrepancy in auto-populated GSTR-3B and GSTR-2A - remand for fresh considerationUndisclosed turnover - tax invoice as primary evidence - e-way bill as record on revenue portal - discrepancy in auto-populated GSTR-3B and GSTR-2A - Whether two transactions treated as 'loose purchases' and assessed as concealed/undisclosed turnover could be sustained when tax invoices and e-way bills relied upon by the petitioner were not disputed by the revenue. - HELD THAT: - The appellate authority sustained tax and penalty only in respect of two purchases characterised as 'loose purchases'. The revenue did not controvert, and for the purposes of the petition effectively admitted, the existence of the tax invoices and the e-way bills relied upon by the petitioner; the appeal order itself refers to the invoice numbers. Once the revenue authority admits issuance of regular tax invoices and e-way bills uploaded on the portal, those documents constitute primary evidence of the transactions and cannot be lightly disregarded. The existence of some discrepancies in statutory returns (GSTR-3B and GSTR-2A) is a lighter charge of discrepancy in accounts and does not ipso facto establish that the transactions were undisclosed or that tax was evaded. In the facts of the case the conclusion that the goods were unaccounted for or turnover concealed is without basis because the transactions were supported by invoices and e-way bills and their genuineness was not challenged. [Paras 9, 10, 11]The appellate authority's sustention of tax and penalty on the two questioned purchases as undisclosed turnover was set aside insofar as it rested on the finding that those transactions were unaccounted for; the invoices and e-way bills could not be ignored.Remand for fresh consideration - Relief to be granted and further proceedings to be directed following setting aside of the impugned part of the appellate order. - HELD THAT: - Having found that the impugned conclusion of undisclosed turnover in respect of the two transactions was unsustainable on the material before the court, the matter was not finally decided on merits by the High Court but was remitted to the appellate authority for fresh adjudication. The appellate authority is directed to pass a fresh order after considering the documents and submissions; any amounts deposited by the assessee during the pendency of the petition may be adjusted against the final demand in accordance with law. [Paras 12]Impugned order dated 18.6.2020 set aside insofar as it sustained tax and penalty on the two transactions; matter remitted to the appeal authority to pass a fresh order with liberty to adjust any deposits.Final Conclusion: Writ petition allowed; the part of the appellate order sustaining tax and penalty on the two disputed purchases is set aside and the matter is remitted to the appellate authority for fresh consideration, with liberty to adjust any sums deposited by the assessee in accordance with law. Issues:Challenge to order under Uttar Pradesh Goods and Services Tax Act, 2017 - Concealed turnover of iron scrap - Appeal against tax and penalty imposition - Discrepancies in GSTR-3B and GSTR-2A - Explanation furnished by petitioner rejected for two 'loose purchases' - Validity of assessing authority's order under Section 130(2) of the Act.Analysis:The petitioner challenged an order passed by the appellate authority under the Uttar Pradesh Goods and Services Tax Act, 2017, which partly allowed the appeal arising from proceedings under Section 130(2) of the Act. The petitioner was held liable for tax on concealed turnover of iron scrap amounting to Rs. 20,00,000, with tax and penalty of Rs. 3,60,000 each being sustained. The petitioner contended that the assessing authority determined the turnover solely based on non-production of books of accounts and discrepancies in auto-populated GSTR-3B and GSTR-2A. The petitioner explained discrepancies and sought to reconcile 'loose purchases' with original tax invoices and e-way bills (para 2-7).The petitioner argued that even the two rejected 'loose purchases' were regular tax invoices, supported by evidence annexed to the writ petition. The petitioner claimed that e-way bills were uploaded for these transactions, which were not denied by the revenue authority. The High Court noted that the revenue authority's acceptance of the invoices and e-way bills as genuine primary evidence made it baseless to conclude tax evasion. Discrepancies in GSTR-3B and GSTR-2A were not conclusive of tax evasion, especially when transactions were supported by valid documentation (para 8-11).The High Court found that the revenue authority's conclusion lacked basis due to the existence of genuine invoices and e-way bills. The discrepancies did not establish undisclosed turnover, as implied acceptance of regular transactions by the revenue authority was crucial. Consequently, the petition was allowed, setting aside the order and remitting the matter to the appeal authority for a fresh decision, with provisions for adjusting any deposited amounts against the final demand (para 12).