2024 (6) TMI 1383 - HC - GST

Tax Demand Order Overturned: Petitioner Granted Fresh Opportunity to Contest Disputed Assessment with Procedural Fairness and Revised Timeline

Tvl. Annai Earth Movers, Represented by its Proprietor S. Rajasekar Versus The Assistant Commissioner (ST) (FAC), Chennai

HC allowed petitioner's challenge to tax demand order. Court set aside original order and directed tax authorities to provide fresh opportunity for ... Violation of principles of natural justice - petitioner did not have a reasonable opportunity to contest the tax demand on merits - SCN and other communications were uploaded in the “View Additional Notices and Orders” tab on the GST portal and not communicated to the petitioner through any other mode - mismatch between the petitioner's GSTR 3B return and the auto-populated GSTR 2A - HELD THAT:- The tax proposal related to a mismatch between the petitioner's GSTR 3B return and the auto-populated GSTR 2A in so far as Input Tax Credit (ITC) is concerned. Such tax proposal was confirmed on the ground that the petitioner did not reply to the show cause notice or attend the personal hearing. By taking into account the assertion that such non participation was on account of being unaware of proceedings, the interest of justice warrants that the petitioner be provided an opportunity to contest the tax demand on merits. The petitioner has placed on record evidence that sums of Rs. 2,25,106/- and Rs. 4,76,974/- were appropriated from the petitioner's bank account after the impugned order was issued. Since these amounts constitute more than 50% of the disputed tax demand, the revenue interest is protected to that extent. The impugned order dated 26.08.2023 is set aside. The petitioner is permitted to submit a reply to the show cause notice within 15 days from the date of receipt of a copy of this order. Upon receipt thereof, the respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within a period of three months from the date of receipt of the petitioner's reply. The petition is disposed off. Issues:1. Lack of reasonable opportunity to contest tax demand on merits due to alleged non-communication of notices.2. Debiting of significant amounts from the petitioner's bank account.3. Compliance with principles of natural justice in issuing notices.4. Mismatch in GSTR returns leading to tax proposal confirmation without petitioner's participation.5. Setting aside the impugned order and providing an opportunity for the petitioner to respond to the show cause notice.Analysis:1. The writ petition challenges an order dated 26.08.2023, alleging that the petitioner was not given a fair chance to contest the tax demand on merits. The petitioner claims that notices were uploaded on the GST portal but not communicated through other means, leading to unawareness of the proceedings.2. The petitioner's counsel highlights that significant amounts were debited from the petitioner's bank account post the impugned order, constituting more than 50% of the disputed tax demand, raising concerns about the fairness of the process.3. The respondent, represented by the Additional Government Pleader, asserts that principles of natural justice were followed by issuing intimation, show cause notice, and a reminder notice on specific dates, indicating compliance with procedural requirements.4. The impugned order was based on a tax proposal concerning a discrepancy between the petitioner's GSTR 3B return and the auto-populated GSTR 2A, particularly regarding Input Tax Credit (ITC). The order was confirmed due to the petitioner's non-response to the show cause notice and absence at the personal hearing, attributed to alleged unawareness of the proceedings.5. In the interest of justice, the court sets aside the impugned order, allowing the petitioner to reply to the show cause notice within 15 days. The respondent is directed to grant a reasonable opportunity, including a personal hearing, and issue a fresh order within three months from receiving the petitioner's response. Any amounts already debited shall be subject to the outcome of the revised proceedings.This comprehensive analysis covers the issues raised in the judgment, detailing the arguments presented by both parties and the court's decision to provide a fair opportunity for the petitioner to contest the tax demand on merits.