GST assessment on director remuneration reverse charge, misc expenses, and exempt art training turnover sent back for reconsideration

Impugned GST assessment orders were challenged for breach of natural justice and non-application of mind, alleging the replies were not considered. On reverse charge liability relating to director's remuneration, the record showed the taxpayer had specifically stated that remuneration was paid to its managing director; therefore, the finding that it failed to clarify the director's status was unsustainable, requiring reconsideration. On tax, interest and penalty levied on "miscellaneous expenses," the authority mechanically applied tax on total heads of expenditure despite reliance on exemption notifications and assertions that several purchases were from registered dealers; this was held to be without proper application of mind, necessitating remand. On exempt turnover, despite reliance on Notification No.12/2017 for exempt training/coaching in art and culture, the authority erroneously treated the activity as sale of artworks; the assessment orders were set aside and remanded for fresh consideration.

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Issues involved: Challenge to assessment orders for assessment years 2018-19, 2019-20, and 2020-21 based on director's remuneration, miscellaneous expenses, and exempted turnover.

Director's Remuneration:
The petitioner argued that the assessment orders were issued without considering their replies and demonstrated a lack of application of mind. The petitioner contended that the remuneration paid to the managing director was exempt from GST under relevant provisions. The court noted that while the petitioner confirmed payment of remuneration to the managing director, essential documents like employment contracts and TDS details were not submitted, leading to unsustainable conclusions.

Miscellaneous Expenses:
The petitioner raised concerns about the unreasoned findings in the assessment orders regarding various expenses incurred. They argued that the expenses were wrongly assumed to be related to supplies by unregistered persons without proper verification. The court found that the imposition of tax, penalty, and interest based solely on figures from financial statements, without considering exemptions for purchases from registered dealers, lacked proper application of mind.

Exempted Turnover:
Regarding exempted turnover, the petitioner cited relevant notifications exempting certain services related to art and culture from GST. Despite the petitioner's explanations, the Assessing Officer incorrectly concluded that the petitioner was engaged in the sale of paintings and art works, indicating a lack of consideration for the material presented. The court found these conclusions to be erroneous and reflective of non-application of mind.

Judgment:
The court allowed the writ petitions, quashing the impugned orders and remanding the matters for reconsideration by the Assessing Officer. The petitioner was directed to submit all relevant documents within two weeks for a fresh assessment. The Assessing Officer was instructed to provide a reasonable opportunity for the petitioner, including a personal hearing, and issue new assessment orders within two months of receiving the documents.

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