2024 (6) TMI 742 - HC - GST

Man Power Services Tax Dispute: Procedural Flaws Invalidate Assessment, Mandate Fair Hearing and Fresh Order Within 90 Days

Lakshmi and Co. Versus The Assistant Commissioner (ST), The Branch Manager, ICICI Bank Limited

Tax dispute involving man power supply services. HC found procedural irregularities in assessment orders, setting aside original demands while requiring ... Challenge to assessment orders - petitioner did not have a reasonable opportunity to contest the tax demands on merits - discrepancy between the petitioner's GSTR 3B returns and Form 26AS - petitioner did not reply to the show cause notice - HELD THAT:- The petitioner relies on Notification No.11/2027 to contend that a part of the services provided by the petitioner are exempt from GST. In these circumstances, albeit by putting the petitioner on terms, it is just and necessary to provide an opportunity to the petitioner to contest the tax demands on merits. The impugned orders are set aside subject to the condition that the petitioner remits 10% of the disputed tax demand in respect of each assessment period as agreed to after giving credit to the sum of Rs.4,44,025/- appropriated from the petitioner's bank account. Such remittance shall be made within a period of two weeks from the date of receipt of a copy of this order. The writ petition is disposed off. Issues involved: Challenge to tax demands due to lack of reasonable opportunity for contesting assessment orders.Summary:The petitioner, engaged in man power supply for groceries, fruits, and vegetables, challenged assessment orders from 2017-2018 to 2020-2021, claiming lack of opportunity to contest tax demands. The petitioner, under medical advice, was unaware of the proceedings leading to the impugned orders. The petitioner highlighted exemptions under Notification No.11/2017 for services related to packing fruits and vegetables, but not for man power services related to fast moving consumer goods. The government advocate pointed out that notices and reminders were issued before the impugned orders.Upon examination, it was found that tax proposals were based on discrepancies between the petitioner's GSTR 3B returns and Form 26AS, as the petitioner did not respond to the show cause notice. Considering the exemption under Notification No.11/2017, the court set aside the orders, with the condition that the petitioner remits 10% of the disputed tax demand for each assessment period within two weeks. The petitioner can also reply to the show cause notice within this period. Once the remittance is made, the respondent must provide a reasonable opportunity for the petitioner to contest the tax demands, including a personal hearing, and issue fresh orders within three months. The bank attachment was lifted as a consequence of setting aside the original orders.The writ petitions were disposed of without costs, and connected miscellaneous petitions were closed.