2024 (4) TMI 653 - HC - GST

Zero-Rated Supply SEZ Dispute Resolved: Assessment Order Quashed, Procedural Fairness Upheld Under GST Classification Rules

Southern Engineering Services Versus Deputy State Tax Officer - 1, Chennai

HC quashed the assessment order challenging GST classification of zero-rated supply to SEZ unit. Despite initial GSTR-1 return error, GSTR-3B correctly ... Validity Of assessment order passed - SEZ unit - Supply of services without charging GST since it was a zero rated supply - turnover inadvertently reported under the column taxable value in GSTR-1 - HELD THAT:- The petitioner has placed on record the relevant tax invoice. Such tax invoice indicates prima facie that the supply was made to a SEZ unit and that it consequently qualifies as a zero rated supply. The GSTR-3B return of the petitioner is in line with the supply being zero rated. It is also noticeable from the invoice and returns that the supply pertained to the July quarter of assessment period 2017-18. This was during the nascent stage of GST implementation. Thus, I am of the view that this is an appropriate case to provide an opportunity to the petitioner. Consequently, the impugned assessment order is quashed and the matter is remanded for re-consideration by the assessing officer. The petitioner is permitted to submit a reply to the show cause notice within a maximum period of fifteen days from the date of receipt of a copy of this order by enclosing all relevant documents. W.P. is disposed of on the above terms. Issues involved: Assessment order challenged for incorrect reporting of supply as taxable instead of zero rated under GST regime, petitioner's claim of inadvertent error in GSTR-1 return, alleged failure to receive notices due to email diversion to spam folder, compliance with principles of natural justice.Summary:Assessment Order Challenge:The petitioner contested an assessment order dated 21.11.2023, relating to services provided to a SEZ unit without charging GST, as it was a zero rated supply under GST regime's inception. While the GSTR-1 return mistakenly classified the turnover as taxable, the GSTR-3B return correctly identified it as a zero rated supply. The petitioner claimed non-participation in proceedings due to notices being diverted to the spam folder of the GST portal.Contentions and Observations:The petitioner's counsel highlighted that the invoice clearly indicated the supply as zero rated, correctly reflected in the GSTR-3B return, contrary to the GSTR-1 error. The respondent's counsel argued that as a registered person, the petitioner should monitor the GST portal regularly, asserting compliance with natural justice through prior intimation and show cause notice.Judgment and Remand:Considering the evidence, including the tax invoice and returns, showing the supply to a SEZ unit as zero rated during the early GST phase, the court deemed it appropriate to quash the assessment order. The matter was remanded for reassessment by the assessing officer, granting the petitioner a fifteen-day period to respond to the show cause notice and ensuring a fresh assessment order within two months post-receipt of the reply.Disposition:The court disposed of the case, allowing the petitioner to submit a reply within fifteen days, directing the assessing officer to provide a fair opportunity, including a personal hearing, and issue a new assessment order within two months. No costs were awarded, and related motions were closed as a result of the judgment.