2024 (7) TMI 415 - HC - GST

Tax Assessment Dispute: Cashew Manufacturer Wins Conditional Relief with Opportunity to Respond and Challenge Original Order

M/s. S.S. Cashews, Rep: by its Proprietor Versus Deputy State Tax Officer (ST) – I, Panruti

HC addressed a tax assessment challenge involving a cashew manufacturer. The court set aside the original assessment order, conditionally requiring the ... Violation of principles of natural justice - petitioner did not have a reasonable opportunity to contest the tax demand on merits - mismatch between the petitioner's GSTR 3B returns and the auto populated GSTR 2A - HELD THAT:- On examining the impugned assessment order, it is clear that the tax proposal, which related to a mismatch between the petitioner's GSTR 3B returns and the auto populated GSTR 2A, was confirmed on the ground that the petitioner did not reply to the show cause notice. Although the respondent has placed on record proof of service of the show cause notice on the petitioner, the fact remains that the petitioner was not heard before the tax proposal was confirmed. The petitioner asserts that he is in a position to establish that only eligible Input Tax Credit was claimed. Upon putting the petitioner on terms, re-consideration is warranted in the interest of justice. The impugned order dated 05.12.2023 is set aside on condition that the petitioner remits a sum of Rs. 1,00,000/- towards the disputed tax demand. Such remittance shall be made within three weeks from the date of receipt of a copy of this order - petition is disposed off. Issues:Challenge to assessment order based on lack of reasonable opportunity to contest tax demand, jurisdiction of Deputy State Tax Officer, entitlement to benefit of Circular No.183, imposition of interest liability without reference in show cause notice, compliance with principles of natural justice, mismatch in GSTR returns, setting aside of impugned order on condition of remittance and opportunity for petitioner to reply to show cause notice.Analysis:The writ petition challenges an assessment order dated 05.12.2023, alleging that the petitioner, a cashew nut kernels manufacturer, was not given a fair chance to contest the tax demand. The petitioner, not well-versed in computer operations, claims ignorance of the proceedings until after the issuance of the impugned order.The petitioner's counsel argues that the Deputy State Tax Officer lacks jurisdiction in cases where the tax demand exceeds Rs. 75,000 and asserts the petitioner's right to claim only eligible Input Tax Credit under Circular No.183. Another contention is the absence of a reference to interest demand in the show cause notice, while the final order imposes interest liability.On the respondent's side, the Government Advocate contends that the show cause notice was duly served on the petitioner via registered post, ensuring compliance with natural justice principles. The respondent disputes the monetary limit argument, stating that there is no such limit under applicable GST statutes, unlike the provisions of the Tamil Nadu Value Added Tax Act, 2006, and the Central Sales Tax Act, 1956.The impugned assessment order highlights a discrepancy between the petitioner's GSTR 3B returns and auto-populated GSTR 2A, leading to the confirmation of the tax proposal due to the petitioner's failure to respond to the show cause notice. Despite proof of service of the notice, the petitioner was not given an opportunity to be heard before the tax proposal confirmation. The petitioner expresses readiness to prove the eligibility of claimed Input Tax Credit and agrees to remit Rs. 1,00,000 towards the disputed tax demand.Consequently, the impugned order is set aside with the condition of the petitioner's remittance of Rs. 1,00,000. The petitioner is granted three weeks to make the payment and submit a reply to the show cause notice within the same period. Upon receipt of the reply and confirmation of the payment, the respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and issue a fresh order within three months.In conclusion, the writ petition is disposed of with no costs, and related motions are closed as per the terms outlined in the judgment.