2024 (9) TMI 1011 - HC - GST

Tax Order ZD3304242560010 Invalidated: Procedural Flaws and Natural Justice Violations Halt Enforcement Proceedings

M/s. Aadhi Cars Private Limited, (Represented by its Managing Director Mr. Srinivasan Sathasivam) Versus The Assistant Commissioner (ST) (FAC), Coimbatore

HC found multiple procedural irregularities in tax order ZD3304242560010. Order was set aside due to violation of natural justice principles, overlapping ... Multiple discrepancies raised in notices - two show cause notices are independent or not - short payment of tax upon comparing GSTR-9 and GSTR-3B - irregularity in reporting transactions attracting TDS - short payment of interest due to delayed tax payment - claiming of ITC for the period 2017-2018 - HELD THAT:- Upon consideration, it is evident that two show cause notices were issued: one on 15.07.2022 and another on 09.01.2024. The first discrepancy in the notice dated 15.07.2022 and the fourth discrepancy in the notice dated 09.01.2024 are identical, resulting in an overlap. This duplication, along with the issuance of multiple overlapping notices, raises concerns regarding the respondent's non-application of mind. Furthermore, the petitioner did not file a reply to the show cause notice dated 09.01.2024 due to the confusion caused by repeated allegations and the complexity of the ongoing proceedings. While the petitioner had filed an appeal against the impugned order dated 30.04.2024, which culminated from the initial show cause notice dated 15.12.2022, the subsequent ex parte proceedings deprived the petitioner of a fair opportunity to present their case. Hence, this Court is of the opinion that the order under Section 73, dated 30.04.2024 in Reference No.ZD3304242560010 was passed without considering these circumstances, and an ex parte order was issued without affording the petitioner an adequate opportunity to respond or be heard. As a result, the impugned order was passed in clear violation of the principles of natural justice. It is just and proper to set aside the impugned order and direct the respondent to provide the petitioner an opportunity to file a reply/objection along with supporting documents. The impugned order in Reference No.ZD3304242560010, dated 30.04.2024 is set aside, and the matter is remanded to the respondent for fresh consideration, on the condition that the petitioner pays a sum of Rs. 1,40,00,000/- to the respondent within four weeks from the date of receipt of a copy of this order. The setting aside of the impugned order shall take effect only upon payment of the said amount. Petition disposed off. Issues:Challenge to order in Reference No.ZD3304242560010 dated 30.04.2024 based on multiple discrepancies raised in notices, violation of principles of natural justice, non-application of mind by respondent, communication issues regarding notices served via GST portal, denial of fair opportunity to respond, request for remand and fresh consideration.Analysis:The petitioner challenged the order in Reference No.ZD3304242560010 dated 30.04.2024, which was based on discrepancies raised in various notices issued by the respondent for the period 2018-2019. The petitioner disputed discrepancies such as short payment of tax, irregular reporting of TDS transactions, interest payment delays, and ITC claims. The respondent issued multiple notices, including DRC-01 notices and Show Cause Notices, leading to confusion and overlapping of issues. The petitioner contended that certain notices were served solely via the GST portal, causing delays in awareness and hindering the ability to respond effectively. The petitioner argued that the respondent's actions violated principles of natural justice by not providing a proper opportunity to present a reply.The respondent, represented by the Additional Government Pleader, argued that the discrepancies raised in the notices were independent and not identical. However, they expressed willingness to grant relief to the petitioner subject to certain terms. The Court considered the submissions of both parties and examined the materials on record. It noted that the first discrepancy in the notice dated 15.07.2022 and the fourth discrepancy in the notice dated 09.01.2024 were identical, indicating an overlap in the issues raised. The Court found that the multiplicity of proceedings and the confusion caused by repeated allegations deprived the petitioner of a fair opportunity to respond effectively.The Court concluded that the impugned order dated 30.04.2024 was passed without due consideration of the circumstances, resulting in an ex parte order that violated principles of natural justice. It emphasized the importance of providing the petitioner with an opportunity to file a reply/objection with supporting documents. Therefore, the Court set aside the impugned order and remanded the matter to the respondent for fresh consideration, subject to the condition that the petitioner pays a specified amount within a stipulated timeframe. The Court directed the petitioner to file their reply/objection within a specified period after making the payment, following which the respondent would conduct a personal hearing and pass appropriate orders expeditiously.In conclusion, the writ petition challenging the order in Reference No.ZD3304242560010 dated 30.04.2024 was disposed of with the Court's order to set aside the impugned order, provide the petitioner with an opportunity to respond, and remand the matter for fresh consideration by the respondent.