2024 (6) TMI 341 - HC - GST

Tax Order Invalidated: Procedural Lapses Require Fresh Hearing with Comprehensive Review of Evidence and Taxpayer Explanations

HC found tax order invalid due to failure to consider petitioner's reply to show cause notice. Order was set aside and remanded for reconsideration, ... Failure to consider reply and supporting documents - reasoned order requirement - assessment under Section 73 of CGST Act, 2017 - remand for reconsideration with personal hearing - rule of audi alteram partemFailure to consider reply and supporting documents - reasoned order requirement - assessment under Section 73 of CGST Act, 2017 - Whether the impugned assessment order could be sustained where the assessee's reply and supporting documents were not considered and the order lacked reasons rejecting the explanations - HELD THAT: - The Court examined the show cause notice, the petitioner's reply dated 26.05.2023 and the documents enclosed therewith (including the GSTR-1 statement and the annual return in GSTR-9 and supplier invoices). The operative portion of the impugned order merely records non-reply and states that the taxpayer filed a reply 'without any supporting documents' and that reminders were issued; it does not address or record reasons for rejecting the petitioner's specific explanations (non-inclusion of credit notes and non-reflection of supplier's invoices). An assessment order must confront and deal with the explanation and material placed by the assessee and must record reasons if the explanation is rejected. In the absence of such reasoning and rejection on the merits, the impugned order is unsustainable. [Paras 4]Impugned order set aside for being bereft of reasons and for failure to consider the petitioner's reply and supporting documents.Remand for reconsideration with personal hearing - rule of audi alteram partem - Relief to be granted where assessment order is set aside for lack of reasoned consideration - HELD THAT: - Having set aside the impugned assessment order, the Court directed that the matter be remanded to the assessing authority for fresh consideration. The authority is required to provide a reasonable opportunity to the petitioner, including a personal hearing, and to re-examine the petitioner's explanations and the documents already on record before passing a fresh reasoned order. The Court specified a timeline for compliance to ensure expeditious disposal. [Paras 5]Matter remanded for reconsideration; respondent to afford personal hearing and pass a fresh reasoned order within three months from receipt of this order.Final Conclusion: The assessment order dated 28.09.2023 is set aside for failure to consider the assessee's explanations and supporting documents and for lack of reasons; the matter is remanded for fresh consideration after affording a personal hearing, with a fresh reasoned order to be passed within three months. Issues involved: Assailed order based on petitioner's reply to show cause notice not considered.Summary: The petitioner challenged an order dated 28.09.2023 due to the non-consideration of their reply to a show cause notice. The notice alleged discrepancies in the petitioner's GSTR 3B returns compared to GSTR 1 statement and auto-populated GSTR 2A. The petitioner responded on 26.05.2023, but the impugned order was issued on 28.09.2023 without taking their explanation into account.The petitioner's counsel highlighted that the mismatch between GSTR 3B and GSTR 1 was due to not considering the value of credit notes. They pointed out the total value of credit notes in GSTR 1 statement and GSTR 9. Regarding the difference between GSTR 2A and GSTR 3B, it was explained that a supplier, S.M.Network, did not reflect invoices in their returns. The petitioner's explanation and relevant documents were not considered in the impugned order.The Government Advocate stated that the petitioner was notified of the discrepancies and asked to provide supporting documents. As the petitioner failed to do so, the tax proposal was confirmed.The impugned order lacked reasons for rejecting the petitioner's explanation and did not discuss the provided invoices to explain discrepancies. Consequently, the order was set aside, and the matter was remanded for reconsideration. The respondent was directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and issue a fresh order within three months.The case was disposed of on the above terms, and related motions were closed without costs.