2024 (7) TMI 807 - HC - GST

Tax Dispute Resolution: ITC Claim Overturned, Petitioner Granted Opportunity to Present Additional Evidence and Partial Tax Payment

HC found that the petitioner was denied reasonable opportunity to contest tax demand for ITC availed in 2019-20. The court set aside the original order, ... Violation of principles of natural justice - petitioner did not have a reasonable opportunity to contest the tax demand on merits - wrongful availment of ITC - Challenge to assessment order - HELD THAT:- On perusal of the petitioner's reply, it appears that the petitioner submitted original tax invoices, the ledger account pertaining to the supplier concerned, bank statement and relevant GSTR returns. The petitioner does not appear to have submitted eway bills, lorry receipts, weighment slips and the like to establish actual movement of goods. On examining the impugned order, it appears that the tax proposal was confirmed largely on the ground that there was no proof of actual movement of goods. By taking into account the nature of documents submitted by the petitioner, which include the bank statement showing payments made to the supplier, the GSTR 2A indicating the availability of ITC, it is just and appropriate that the petitioner be provided an opportunity to produce relevant documents to prove actual movement of goods. As a condition for remand, however, it is also necessary to put the petitioner on terms. The matter is remanded for reconsideration on condition that the petitioner remits 20% of the disputed tax demand as agreed to within a period of two weeks from the date of receipt of a copy of this order - Petition is disposed off by way of remand. Issues:Petitioner's lack of reasonable opportunity to contest tax demand on merits.Analysis:The petitioner received a show cause notice in 2022 regarding alleged wrongful availing of Input Tax Credit (ITC) for the tax period 2019-20. The petitioner responded with supporting documents, but the impugned order was issued without providing a reasonable opportunity for the petitioner to contest the tax claim on merits.The petitioner contended that she was unaware of the impugned order as GST compliances were managed by her tax consultant. The order came to her notice only upon receiving an attachment order related to her bank account.The petitioner sought another opportunity to present relevant documents and contest the tax claim on merits, agreeing to remit 20% of the disputed tax demand as a condition for remand.The Government Advocate pointed out that three reminders for personal hearing were issued to the petitioner, post her reply to the show cause notice. However, the petitioner did not submit documents to establish the actual movement of goods, which was a crucial aspect in the tax proposal confirmation.Upon reviewing the documents submitted by the petitioner, including tax invoices, bank statements, and GSTR returns, it was deemed appropriate to provide the petitioner with an opportunity to produce additional documents to prove the actual movement of goods. The impugned order was set aside, and the matter was remanded for reconsideration, with the condition of remitting 20% of the disputed tax demand.The petitioner was permitted to submit additional documents within two weeks to establish the actual movement of goods. Once satisfied with the additional documents and the receipt of 20% of the disputed tax demand, the 1st respondent was directed to provide a reasonable opportunity for a personal hearing and issue a fresh order within two months.As a result of setting aside the impugned order, the attachment order was lifted, and the case was disposed of without any costs.