2024 (8) TMI 250 - HC - GST

Tax Demand Order Invalidated: Petitioner Denied Fair Hearing, Case Remanded for Proper Procedural Compliance with Opportunity to Respond

HC set aside tax demand order due to lack of reasonable opportunity for the petitioner to contest. Remanded case for reconsideration, directing respondent ... Violation of principles of natural justice - petitioner did not have a reasonable opportunity to contest the tax demand on merits - reversal of ITC - HELD THAT:- The petitioner has placed on record the GSTR 3B returns for September and March 2022-23. On examining these two returns, it appears prima facie that the entire Input Tax Credit availed of in September was reversed in March 2022-23. In the affidavit, the petitioner has asserted that a sum of Rs. 6,57,647/- was appropriated from his bank account on 05.04.2024. This amount matches the total demand, including interest and penalty. As such, revenue interest is fully secured at this juncture. These facts and circumstances justify a remand. The impugned order dated 26.12.2023 is set aside and the matter is remanded to the respondent for re-consideration. The petitioner is permitted to submit a reply to the show cause notice within a period of fifteen days from the date of receipt of a copy of this order - petition disposed off by way of remand. Issues:Challenge to tax demand due to lack of reasonable opportunity for contesting, Reversal of Input Tax Credit, Compliance with principles of natural justice, Appropriation of amount from bank account, Setting aside the impugned order and remanding the matter for re-consideration.Challenge to Tax Demand:The petitioner challenges an order dated 26.12.2023, claiming they did not have a reasonable opportunity to contest the tax demand on merits. The petitioner, a small-scale business dealer not well-versed with the GST portal, engaged a consultant who failed to inform them about the show cause notice and other communications. Despite lodging an appeal immediately upon learning of the order, it was rejected as beyond the condonable period.Reversal of Input Tax Credit:The confirmed tax proposal relates to the Input Tax Credit availed in GSTR 3B returns for September in the assessment period 2022-23. The petitioner reversed the Input Tax Credit to the extent of Rs. 4,73,810/- in the GSTR 3B return for March in the same assessment year. Due to the inability to participate in proceedings, this reversal was not brought to the respondent's notice, leading to an appropriation of Rs. 6,57,647/- from the petitioner's bank account.Compliance with Principles of Natural Justice:The Special Government Pleader confirms that after scrutiny of returns, a notice and a personal hearing were provided to the petitioner, demonstrating compliance with principles of natural justice. The petitioner submitted GSTR 3B returns for September and March 2022-23, showing the reversal of Input Tax Credit.Appropriation of Amount from Bank Account:A sum of Rs. 6,57,647/- was deducted from the petitioner's bank account on 05.04.2024, matching the total demand, including interest and penalty. This action secured the revenue interest fully, justifying a remand in the case.Setting Aside the Impugned Order and Remanding for Re-Consideration:The High Court sets aside the order dated 26.12.2023 and remands the matter to the respondent for re-consideration. The petitioner is granted fifteen days to reply to the show cause notice, and the respondent is directed to provide a reasonable opportunity, including a personal hearing, before issuing a fresh order within three months. The amount appropriated from the petitioner's bank account shall be subject to the outcome of the remanded proceedings. The case is disposed of with no costs incurred.