Tax Assessment Challenge Upheld: Partial Payment Required, Bank Attachment Lifted, Objection Rights Preserved Under Rule 25%

HC ruled in favor of petitioner challenging tax assessment order for 2019-2020. Court set aside the original order, directing petitioner to deposit 25% of disputed tax within four weeks. Bank account attachment to be lifted upon compliance, with opportunity granted to submit objections. The order was treated as a show cause notice, providing procedural fairness while ensuring partial tax recovery.

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Issues:
Challenge to impugned order for assessment year 2019-2020 regarding Input Tax Credit (ITC) availed in excess, rejection of ITC claim based on discrepancies in GSTR-3B and GSTR-2A, imposition of penalty, opportunity for explanation, recent judgment reference, willingness to pay 25% of disputed tax, bank account attachment, conditions for lifting bank attachment, submission of objections, timeline for compliance.

Analysis:

The petitioner challenged the impugned order issued by the respondent regarding the assessment year 2019-2020, where the respondent found discrepancies in the Input Tax Credit (ITC) availed by the petitioner in comparison to the GSTR-2A statement. The respondent issued various notices and forms, leading to the imposition of a penalty on the petitioner. The petitioner contended that proper hearing was not provided before reversing the ITC and imposing the penalty, leading to the filing of the writ petition to challenge the order.

The assessment order highlighted three main grounds for rejecting the ITC claim: mismatch between GSTR-3B and GSTR-2A, failure to reverse ITC based on debit in GSTR-2A, and non-generation of E-Way bill for goods movement. The petitioner sought an opportunity to explain these discrepancies and relied on a recent judgment by the court in a similar case to support their argument.

During the proceedings, the petitioner expressed readiness to pay 25% of the disputed tax and requested a final opportunity to present objections before the adjudicating authority. The petitioner had already paid a certain amount, which they proposed to adjust in the payment of the disputed tax. The respondent did not object to this proposal, leading to a discussion on lifting the attachment on the petitioner's bank account upon payment of the agreed amount.

Ultimately, the court set aside the impugned order and directed the petitioner to deposit 25% of the disputed tax within four weeks, adjusting the amount already paid. Upon compliance, the bank attachment would be lifted. The impugned order was treated as a show cause notice, allowing the petitioner to submit objections within a specified timeline. Failure to comply with the conditions would result in the revival of the assessment order. The writ petition was disposed of with these directions, and no costs were awarded.

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