Tax Dispute Resolved: Petitioner Granted Chance to Respond, Must Pay 10% of Disputed Amount While Case Undergoes Reconsideration

HC allowed the writ petition challenging a tax order. The court set aside the original order and remanded the matter, granting the petitioner an opportunity to respond to the show cause notice. The petitioner must remit 10% of the disputed tax demand within two weeks. The respondent must reconsider the case and issue a fresh order within three months after receiving the petitioner's reply.

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Issues: Breach of principles of natural justice, violation of statutory rules, mismatch between GSTR 1 and GSTR 3B returns

The judgment delivered by the High Court addressed the challenge against an order dated 17.10.2023 on the grounds of breach of principles of natural justice. The petitioner contended that personal difficulties prevented her from responding to the show cause notice, leading to the inability to defend the tax proposal on merits. The petitioner sought relief through a writ petition. The counsel for the petitioner argued that the action initiated based on a mismatch between the GSTR 1 statement and GSTR 3B returns violated statutory rules. The counsel expressed confidence that given an opportunity, the petitioner could demonstrate the tax proposal should be dropped and agreed to remit 10% of the disputed tax demand for remand.

The Government Advocate representing the respondent acknowledged the show cause notice and reminders preceding the impugned order. She clarified that Rule 88C of the Central Goods and Services Tax Rules, 2017 was not applicable to the current proceedings, emphasizing its relevance only for assessments post 07.01.2022. The impugned order confirmed the tax proposal due to the mismatch between the GSTR 1 statement and GSTR 3B return, as the petitioner did not respond to the show cause notice or attend the hearing. The court deemed it just and necessary to provide the petitioner an opportunity to contest the tax demand on merits, setting aside the order and remanding the matter for reconsideration with the condition of remitting 10% of the disputed tax demand within two weeks.

As a result, the petitioner was granted permission to submit a reply to the show cause notice within the specified period. Upon receiving the reply and verifying the payment of 10% of the disputed tax demand, the respondent was directed to afford a reasonable opportunity to the petitioner, including a personal hearing, and issue a fresh order within three months from the date of receiving the reply. The writ petition was disposed of without costs, and connected miscellaneous petitions were closed, concluding the legal proceedings in the matter.

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