Tax Demand Challenged: Procedural Flaws Invalidate Order, Petitioner Directed to Pay Partial Tax and Respond Promptly The HC allowed the writ petition challenging a tax demand, finding procedural irregularities in communication. The court set aside the original order, ...
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Tax Demand Challenged: Procedural Flaws Invalidate Order, Petitioner Directed to Pay Partial Tax and Respond Promptly
The HC allowed the writ petition challenging a tax demand, finding procedural irregularities in communication. The court set aside the original order, directing the petitioner to pay 10% of the disputed tax and submit a reply within two weeks. The respondent must provide a fair hearing and issue a fresh order within three months, ensuring principles of natural justice are followed.
Issues: Challenge to tax demand due to lack of reasonable opportunity for contesting, compliance with principles of natural justice, satisfaction of Section 74 of GST statutes.
Analysis:
1. The writ petition challenges an order dated 27.11.2023, asserting that the petitioner was not given a reasonable opportunity to contest the tax demand on merits. The petitioner claims that crucial communications, such as the show cause notice, were only uploaded on the GST portal and not directly communicated, leading to unawareness and non-participation in the proceedings.
2. The petitioner's counsel argues that the confirmed tax proposal is based on discrepancies between the GSTR 3B and 1 returns, contending that Section 74 of the GST statutes is not applicable in this case. The petitioner agrees to pay 10% of the disputed tax demand as a condition for reconsideration.
3. The Government Advocate representing the respondent asserts that principles of natural justice were followed, citing the issuance of intimation, show cause notice, and a personal hearing notice. He argues that the petitioner's failure to pay taxes on reported supplies in GSTR 1 amounts to suppression of facts, justifying the tax proposal confirmation.
4. Upon scrutiny, it is evident that the tax proposal was confirmed due to the taxpayer's non-payment and lack of objections. Recognizing the petitioner's claim of non-awareness of proceedings, the court deems it necessary to set aside the order and allow the petitioner to remit 10% of the disputed tax demand within two weeks for reconsideration.
5. Consequently, the impugned order is overturned with the condition of payment and submission of a reply to the show cause notice within two weeks. The respondent is directed to provide a fair opportunity, including a personal hearing, and issue a fresh order within three months of receiving the petitioner's reply.
6. The writ petition is disposed of without costs, with connected petitions closed, ensuring that the petitioner receives a fair chance to contest the tax demand based on principles of natural justice and procedural fairness.
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