2024 (6) TMI 1310 - HC - GST

Tax Demand Partially Upheld: Petitioner Ordered to Pay 15% While Challenging Assessment with Procedural Safeguards and Fresh Hearing Opportunity

HC allowed the writ petition challenging tax demand, finding procedural irregularities. The court remanded the matter to tax authorities, directing ... Denial of reasonable opportunity - remand for fresh consideration on terms - setting aside impugned orders - opportunity to reply to show cause notice and personal hearingDenial of reasonable opportunity - failure to receive or respond to show cause notice - The petitioner was entitled to an opportunity to contest the tax demand where proceedings proceeded without the petitioner having had a reasonable chance to reply. - HELD THAT: - The impugned assessment and appellate orders arose from non-reporting of two e-way bills in GSTR-1 and confirmation of tax liability because there was no reply to the show cause notice. The petitioner explained that GST compliance was entrusted to an accountant and that he was not aware of the proceedings, which prevented participation on merits. In view of that asserted lack of notice and in the interest of justice, the High Court found that the petitioner should be given an opportunity to contest the demand before the authority rather than allow the orders to stand without hearing on merits. [Paras 4]Impugned orders set aside and the petitioner afforded a fresh opportunity to reply and be heard.Remand for fresh consideration on terms - payment as condition for remand - direction to decide afresh within fixed time - The matter was remanded to the original authority for reconsideration on specified terms and timelines. - HELD THAT: - The Court remitted the matter to the second respondent for re-consideration on condition that the petitioner remit an additional 5% of the disputed tax demand within two weeks of receipt of the order and be permitted to submit a reply to the show cause notice within the same period. Upon receipt of the payment and reply, the second respondent is to provide a reasonable opportunity, including a personal hearing, and thereafter pass a fresh order within three months from receipt of the petitioner's reply. These procedural terms were imposed as equitable conditions to balance the petitioner's asserted lack of notice with the need for final disposal. [Paras 5]Matter remanded to the second respondent subject to payment of an additional 5%, opportunity to reply and personal hearing, and requirement to issue a fresh order within three months.Final Conclusion: Writ petition allowed to the extent that the impugned orders dated 04.09.2023 and 12.04.2024 are set aside and the matter is remanded to the assessing authority on the stated terms; petition disposed of with no costs. Issues involved:Challenge to tax demand on grounds of lack of reasonable opportunity for contesting, rejection of appeal on limitation grounds, non-participation due to lack of awareness of proceedings, remand for reconsideration with conditions.Analysis:1. The petitioner challenged an order in original and an appellate order, claiming they did not have a fair opportunity to contest the tax demand. The petitioner alleged that their Accountant failed to inform them about the proceedings, leading to the filing of the writ petition.2. During the Covid-19 pandemic, the petitioner did not conduct business and filed nil returns. Upon learning of the original order, an appeal was filed, which was rejected due to limitations. The petitioner agreed to pay 10% of the disputed tax demand during the appeal and offered an additional 5% for remand to the original authority.3. The Additional Government Pleader confirmed that various notices were issued to the petitioner, including Form ASMT 10, a show cause notice, and a personal hearing notice. These notices indicated attempts to inform the petitioner about the proceedings.4. The impugned order related to two e-way bills not reported in GSTR 1 statements. The tax proposal was confirmed as the petitioner did not respond to the show cause notice. Considering the petitioner's claim of non-awareness of proceedings, the court decided to provide an opportunity to the petitioner with certain conditions.5. The court set aside the challenged orders and remanded the matter for reconsideration, requiring the petitioner to pay an additional 5% of the disputed tax demand within two weeks. The petitioner was allowed to respond to the show cause notice within this period. Upon receipt of the response and confirmation of payment, the second respondent was directed to provide a fair opportunity to the petitioner, including a personal hearing, and issue a fresh order within three months.6. The writ petition was disposed of based on the above terms, with no costs imposed. Consequently, the related miscellaneous petition was closed as well.