GST Assessment Order Overturned: Detailed Review Mandated with Comprehensive Documentation and Fair Hearing Process

HC quashed assessment order related to multiple GST discrepancies involving trade discounts, return mismatches, indirect income, and rent payments. The court remanded the matter for reconsideration, directing the assessing officer to request additional documentation, provide a personal hearing, and issue a fresh assessment order within two months, without imposing costs.

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Issues involved:
The judgment deals with the assessment order assailed regarding Discrepancy Nos.1, 2, 10, and 11, relating to non-GST supply, alleged mismatch between GSTR-3B and GSTR-1 returns, indirect income, and rent for commercial purposes.

Discrepancy No.1 - Non-GST supply:
The petitioner, engaged in textiles and as an authorized dealer of Hyundai Motor Vehicles, received trade discounts from suppliers. The petitioner's error was in reporting under the wrong column, resulting in tax, interest, and penalty imposition. The assessing officer failed to recognize that the discounts were non-GST supplies. The petitioner's explanation was supported by financial credit notes, but the assessing officer claimed relevant documents were not produced. The tax liability with interest and penalty should not have been imposed without further document verification.

Discrepancy No.2 - Mismatch in returns:
The assessing officer accepted no discrepancy between GSTR-3B and GSTR-1 returns for CGST and SGST but alleged a short payment of tax under IGST without raising the issue in the show cause notice. The court found this discrepancy unacceptable and suggested issuing a fresh show cause notice for this specific matter.

Discrepancy No.10 - Indirect income:
The petitioner submitted copies of service tax and GSTR-3B returns to prove disclosure of indirect income, contrary to the assessing officer's claim of no documentary evidence submission. The court found the assessing officer's conclusion untenable in the presence of submitted documents.

Discrepancy No.11 - Rent for commercial purposes:
Regarding rent payments, the petitioner stated tax liability was discharged for payments to unregistered persons under the RCM method. The assessing officer's conclusion that tax liability was not discharged lacked proper document verification. The court directed the assessing officer to request relevant documents before making such determinations.

Conclusion:
The High Court quashed the assessment order in relation to Discrepancy Nos.1, 2, 10, and 11, remanding the matter for reconsideration. A fresh show cause notice was advised for Discrepancy No.2, while the petitioner was allowed to submit additional documents for Discrepancy Nos.1, 10, and 11 within two weeks. The assessing officer was directed to provide a reasonable opportunity for the petitioner, including a personal hearing, and issue a fresh assessment order within two months. The case was disposed of without costs, and related motions were closed.

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