Tax order set aside for violating natural justice principles after petitioner denied opportunity to contest GST reporting errors

HC set aside tax order dated 27.07.2023 for violating natural justice principles where petitioner lacked reasonable opportunity to contest tax proposal on merits regarding GST reporting errors in November 2017. Court found original order confirmed tax demand solely because petitioner failed to file written objections or attend hearing. Since petitioner claimed inadvertent error was rectified in subsequent returns, matter remanded for reconsideration on condition petitioner deposits 10% of disputed tax demand within two weeks.

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Issues involved: Challenge to order on grounds of lack of opportunity to contest tax proposal.

Summary:
The petitioner, a dealer in agricultural implements, challenges an order dated 27.07.2023, alleging lack of opportunity to contest the tax proposal. The petitioner claims unawareness of the proceedings leading to the order, as the notice and order were uploaded on the GST portal under "View Additional Notices and Orders." A rectification petition was filed on 08.08.2023, followed by the present writ petition.

The petitioner's counsel argues that an error occurred in reporting outward supplies and Input Tax Credit (ITC) in November 2017, which was rectified in the annual return (Form GSTR 9) and ITC was reversed in the GSTR 3B for March 2020. Requesting an opportunity to contest, the petitioner agrees to remit 10% of the disputed tax demand.

The Government Advocate for the respondent acknowledges issuing a notice in Form ASMT 10 in March 2023 due to discrepancies in the petitioner's returns. He highlights that the impugned order followed a show cause notice dated 10.05.2023, to which the petitioner did not respond. The ITC reversal was done in March 2020.

Upon review, it is found that the tax proposal was confirmed due to the petitioner's failure to file objections or attend a personal hearing. Considering the rectification made in the returns, justice demands providing the petitioner with another opportunity to contest the tax proposal, subject to remitting 10% of the disputed tax demand.

Consequently, the impugned order is set aside, and the matter is remanded for reconsideration with the condition of remitting the agreed amount within two weeks. The petitioner can reply to the show cause notice within this period. Once the reply is received and the remittance confirmed, the respondent must offer a reasonable opportunity, including a personal hearing, and issue a fresh order within three months.

The writ petition is disposed of without costs, and connected miscellaneous petitions are closed.

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