2024 (5) TMI 757 - HC - GST

High Court Quashes GST Tax Demand, Mandates 10% Deposit and Fresh Order with Technical Evidence Review

HC allowed writ petition challenging tax demand under GST Act. The court set aside the original order, requiring petitioner to deposit 10% of disputed tax ... Recovery of short paid duty alongwith interest and penalty - no sufficient reply filed by the petitioner - HELD THAT:- The reply filed by the petitioner, which is an undated, does not deal with the allegations in the notices that were issued to the petitioner. That apart, the petitioner should have filed necessary evidence and produced samples to establish that there is no manufacturing activity carried out by the petitioner and therefore, the stand of the third respondent was incorrect. Considering the fact that the issue has to be decided one way or the other on the correct classification adopted by the petitioner and the respondents, this Court is inclined to set aside the impugned order subject to the petitioner depositing 10% of the disputed tax with the third respondent within a period of 30 days from the date of receipt of a copy of this order. The petitioner shall file detailed reply to the impugned order enclosing the technical literature and produce the samples before the third respondent The impugned order, which stands quashed, shall be treated as corrigendum to the notices issued to the petitioner prior to the impugned order. Petition allowed. Issues involved: Challenge to impugned order dated 30.12.2023 u/s GSTIN. 33ALYPP1128K1ZO/2017-18.Judgment Summary:Tax Liability Determination: The third respondent confirmed the tax liability of the petitioner under Sec. 73(1) of the GST Act 2017, amounting to Rs. 41,65,176/- (IGST Rs. 40,94,520/-, CGST Rs. 35,328/- & SGST Rs. 35,328/-). Additionally, interest liability u/s 50(1) of the GST Act 2017 and penalty of 10% on the tax liability were also confirmed.Reasons for Confirming Demand: The confirmation was based on the petitioner's failure to provide a valid reply or cooperate during the process. The nature of the manufactured product, 'Brush Fibre,' was discussed in detail to determine its taxability at 12% under Notification No. 1/2017 Central Tax (Rate) Dated 28.06.2017.Petitioner's Response: The petitioner's reply, though lacking in addressing the allegations, emphasized the absence of manufacturing activity. The court noted discrepancies in the petitioner's response and the need for detailed evidence to support their claims.Court Decision: The court set aside the impugned order, requiring the petitioner to deposit 10% of the disputed tax within 30 days. The petitioner was directed to submit a detailed reply, technical literature, and samples to the third respondent. The impugned order was quashed, pending a fresh order from the third respondent within 45 days.Conclusion: The Writ Petition was allowed with no costs, and the connected Miscellaneous Petition was closed.