2024 (3) TMI 777 - HC - GST

GST order set aside for failing to consider petitioner's submissions during July 2017 return rectification proceedings

The Telangana HC allowed a petition challenging a GST order regarding rectification of errors in filing returns for July 2017, during GST law's initial ... Inadvertent and bona fide errors in GST returns during nascent GST period - permissibility of rectification/amendment of GSTR returns - failure to consider relevant submissions and mechanical decision-making - personal hearing before adjudicating tax demand - remand for fresh adjudication and reconsideration of contentionsFailure to consider relevant submissions and mechanical decision-making - personal hearing before adjudicating tax demand - remand for fresh adjudication and reconsideration of contentions - Impugned order confirming demand and imposing penalty set aside for want of consideration of petitioner's submissions; matter remitted for fresh adjudication with opportunity for personal hearing. - HELD THAT: - The Court found that the order dated 09.11.2023 affirming the demand and imposing penalty was passed in a routine or mechanical manner without dealing with the detailed reply and contentions raised by the petitioner. For that reason the impugned order was interdicted and set aside. The matter is remitted to respondent No.1 for fresh consideration on merits, with a direction to grant a fresh personal hearing to the petitioner and to decide after taking into account the entire factual matrix and the petitions' submissions. The petitioner was directed to appear on 27.02.2024 and no fresh notice was required to be issued for that appearance. [Paras 9, 10, 11]Impugned order set aside; matter remitted for fresh consideration and personal hearing, petitioner to appear on 27.02.2024.Inadvertent and bona fide errors in GST returns during nascent GST period - permissibility of rectification/amendment of GSTR returns - Court recognised precedents permitting correction of inadvertent errors in early GST period and directed the adjudicating authority to consider such decisions while reconsidering the matter. - HELD THAT: - The Court took note of decisions of several High Courts which, in the context of the nascent stage of GST implementation, have recognised that inadvertent and bona fide errors may be permitted to be rectified and have directed facilitation of amendments to GSTR returns where there is no loss of revenue. While the Court did not itself order rectification in this case, it expressly recorded those authorities and directed respondent No.1 to take such decisions into account while adjudicating afresh on the petitioner's contentions. [Paras 6, 8, 10]Adjudicating authority to consider relevant High Court precedents on rectification of inadvertent errors while deciding the remitted matter.Final Conclusion: Writ petition allowed; order dated 09.11.2023 set aside and matter remitted to respondent No.1 for fresh adjudication after granting personal hearing to the petitioner on 27.02.2024; no order as to costs. Issues involved:The challenge in the present Writ Petition is to the order passed by respondent No. 1 affirming the demand under Section 73(1) of Central Goods and Services Tax Act, 2017 and imposing a penalty under Section 73 of the Act. The dispute arose due to errors in GST returns for the period July 2017, at the initial stage of GST implementation.Details of the Judgment:Error in GST Returns:The petitioner made errors in reflecting the CGST and SGST tax components in its GST returns for July 2017. Despite promptly notifying the authorities about the errors and seeking permission to rectify them, subsequent mistakes were made in the ITC reversal under IGST instead of SGST during the audit of Form GSTR-3B in September 2018.Show Cause Notice and Impugned Order:Following a show cause notice alleging excess ITC availment, the petitioner submitted a detailed reply highlighting the inadvertent errors made. However, the respondent-authorities mechanically passed the impugned order without addressing the contentions raised in the petitioner's reply, confirming the demand and imposing a penalty.Judicial Precedents and Relief Sought:The petitioner's counsel referred to decisions from various High Courts where similar issues were addressed favorably to the assessees. The High Courts emphasized the need for the department to recognize and permit corrections for inadvertent errors in GST returns, ensuring a more assessee-friendly approach. Based on these precedents, the High Court allowed the petition, setting aside the impugned order and remitting the matter back to respondent No. 1 for reconsideration, directing a fresh personal hearing for the petitioner.Conclusion and Directions:The High Court allowed the Writ Petition, permitting the petitioner to make fresh submissions and directing respondent No. 1 to reconsider the matter in light of the contentions raised and judicial precedents. The petitioner was instructed to attend a hearing on a specified date, without the need for a fresh notice. The judgment concluded with no order as to costs, and any pending miscellaneous applications were to be closed.