Tax Dispute Resolved: Petitioner Must Pay 10% of Demand, Granted Hearing and Chance to Respond Within Two Months

The HC partially allowed the tax dispute, quashing the original order. The court mandated the petitioner to remit 10% of the disputed tax demand within two weeks and granted an opportunity to submit a reply. The assessing officer must provide a personal hearing and issue a fresh assessment order within two months, ensuring principles of natural justice are followed.

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Issues:
The petitioner challenges an order dated 06.10.2023, claiming lack of reasonable opportunity to contest the tax demand. The issues involve disparity between GSTR-3B and GSTR-2B returns, validity of ITC availed by the petitioner, and adherence to principles of natural justice.

Disparity between GSTR-3B and GSTR-2B returns:
The petitioner, a dealer of woven fabrics and readymade garments, received a show cause notice on 23.06.2023 regarding tax liability. The impugned order was issued due to disparity between the GSTR-3B and GSTR-2B returns. The petitioner later explained that the Input Tax Credit (ITC) was validly availed of, but failed to provide supporting documents initially. The court acknowledges the petitioner's negligence but emphasizes the importance of providing an opportunity to explain the alleged disparity to ensure justice.

Validity of ITC availed by the petitioner:
The petitioner, subsequent to the order, submitted documents supporting the valid availing of ITC. Despite the delay in providing this explanation, the court recognizes the potential validity of the petitioner's claim. It is deemed crucial to allow the petitioner a chance to clarify the situation to prevent prejudice to the interest of justice.

Adherence to principles of natural justice:
The respondent, through the Government Advocate, stated that the petitioner acknowledged receipt of the intimation and show cause notice. It was also mentioned that the petitioner was offered a personal hearing, indicating compliance with principles of natural justice. The court, while acknowledging this, emphasizes the need to ensure a fair opportunity for the petitioner to present their case effectively.

Judgment Summary:
The impugned order is quashed, with a condition that the petitioner remits 10% of the disputed tax demand within two weeks. The petitioner is granted the opportunity to submit a reply within this period. Upon receipt of the reply and the 10% remittance, the assessing officer is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and issue a fresh assessment order within two months. The case is disposed of with no costs incurred, and related motions are closed accordingly.

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