2024 (6) TMI 889 - HC - GST

HC Overturns Tax Adjudication Order, Mandates 10% Deposit and Fresh Review of ITC Discrepancies Under GST Circular 183

HC set aside an adjudication order related to ITC discrepancies, finding non-compliance with GST Circular No. 183/15/2022. The court remitted the matter ... Discrepancy between ITC in GSTR-3B and GSTR-2A - applicability of administrative circular in pending adjudications - remand for fresh consideration for non-application of prescribed procedure - opportunity of hearing and conditional stay by depositDiscrepancy between ITC in GSTR-3B and GSTR-2A - applicability of administrative circular in pending adjudications - remand for fresh consideration for non-application of prescribed procedure - Impugned adjudication disallowing ITC solely on the basis of discrepancy between GSTR-3B and GSTR-2A was set aside and the matter remitted for fresh consideration in light of Circular No.183/15/2022-GST dated 27.12.2022. - HELD THAT: - The adjudication order records a discrepancy between ITC claimed in GSTR-3B and that reflected in GSTR-2A and disallowed the claim on that ground. Circular No.183/15/2022-GST is expressly made applicable to financial year 2017-18 and prescribes a procedure, including special directions where differences are below a specified threshold and steps to be followed in pending adjudications. Where a statutory or administrative procedure governs matters pending adjudication, the adjudicating authority ought to have taken note of and followed that procedure irrespective of whether the assessee independently invoked it. In view of the Circular's applicability to the period in question, the court found prima facie that the adjudication could not be sustained without following the prescribed procedure and therefore set aside the order and remitted the matter for fresh adjudication, affording the petitioner another opportunity to be heard. [Paras 6, 7, 8]Adjudication order set aside and matter remitted to the authority for fresh consideration in terms of the Circular; petitioner granted another opportunity to be heard.Applicability of administrative circular in pending adjudications - remand for fresh consideration for non-application of prescribed procedure - Applicability of the Circular to the present facts was treated as prima facie and remitted for final determination by the adjudicating authority. - HELD THAT: - Although the court held the Circular prima facie applicable to the financial year involved and set aside the adjudication for non-application of the prescribed procedure, it expressly left open the question whether the Circular's applicability may vary depending on the specific facts of the case. That factual determination is to be examined and decided afresh by the authority on remand. [Paras 7]Whether the Circular applies on the specific facts is left open and to be decided by the adjudicating authority on remand.Opportunity of hearing and conditional stay by deposit - Petitioner to be given another opportunity to participate in proceedings subject to making an additional deposit of 10% of the tax amount determined in the adjudication order. - HELD THAT: - By setting aside the adjudication and remitting the matter, the court directed that the petitioner be afforded one more hearing before the authority. As a condition of this opportunity and by virtue of vacating the impugned order, the court required the petitioner to make an additional deposit amounting to 10% of the tax as determined in the adjudication order dated 02.05.2023. [Paras 8]Petitioner granted fresh opportunity to be heard subject to an additional deposit of 10% of the tax amount as determined in the adjudication order.Final Conclusion: Impugned adjudication disallowing ITC on the ground of discrepancy between GSTR-3B and GSTR-2A is set aside; matter remitted for fresh consideration in light of Circular No.183/15/2022-GST (applicable prima facie to FY 2017-18), with the question of the Circular's applicability on specific facts left to the authority; petitioner granted a further hearing subject to an additional deposit of 10% of the tax determined. Issues involved: Setting aside of adjudication order based on discrepancies in ITC claimed as per GSTR-3B and GSTR-2A, failure to follow prescribed procedure, applicability of Circular No. 183/15/2022-GST, opportunity for petitioner to explain discrepancies.Summary:The petitioner sought setting aside of an adjudication order due to discrepancies in ITC claimed as per GSTR-3B and GSTR-2A. The petitioner argued that they were not given sufficient opportunity to explain the discrepancies. Reference was made to Circular No. 183/15/2022-GST, which outlines procedures for addressing discrepancies, and it was contended that non-following of such procedure prejudiced the petitioner. The Court noted the discrepancy and the applicability of the Circular specifically to the financial year in question. The Court held that the adjudicating authority should have considered the Circular regardless of the petitioner's contentions. Consequently, the adjudication order was set aside, and the matter was remitted back for fresh consideration, allowing the petitioner another opportunity to present their case. The petitioner was required to make an additional deposit of 10% of the tax amount as determined in the original adjudication order.In conclusion, the Court set aside the adjudication order, citing the applicability of the Circular and the need for the authority to follow prescribed procedures. The petitioner was granted another opportunity to participate in the proceedings and make an additional deposit.