Tax Assessment Challenged: ITC Discrepancies Invalidate Order Due to Procedural Violations and Lack of Natural Justice Principles

HC examined a tax assessment dispute involving ITC discrepancies and procedural violations. The court found the assessment order exceeded the show cause notice, violating principles of natural justice. HC set aside the order, directing the petitioner to deposit disputed tax liability and submit supporting documents within four weeks. Respondents agreed to reconsider objections after providing a fair hearing. The writ petition was disposed of without costs.

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Issues:
Challenging an impugned order of assessment for traversing beyond the show cause notice and lack of opportunity to present evidence. Discrepancy between GSTR-2A and GSTR-3B, ITC on discounts, charges without documentary evidence, non-payment of tax under RCM, wrong ITC on depreciation, and non-filing of GSTR-9 and GSTR-9C.

Analysis:
The petitioner, a partnership concern in the sale of home appliances, challenged an order of assessment for exceeding the show cause notice and denying the opportunity to present supporting evidence. An audit revealed discrepancies in ITC, discounts, charges without proof, tax non-payment under RCM, wrong ITC on depreciation, and non-filing of GSTR-9 and GSTR-9C. The show cause notice highlighted an excess ITC of Rs. 97,010, but the assessment disallowed a significant amount of ITC claimed by the petitioner. The order of adjudication was deemed to violate principles of natural justice as it went beyond the show cause notice, denying the petitioner a fair chance to present their case.

The petitioner argued against the disallowance of ITC on discounts, finance charges, and depreciation, stating that discounts were properly adjusted through credit notes and finance charges might not be taxable. The respondents contended that the order was appealable, urging against entertaining the Writ Petition. The Court acknowledged the violation of natural justice in the primary dispute of ITC discrepancies. The order was set aside, allowing the petitioner to deposit the tax liability related to the disputed issues within four weeks and submit objections with supporting documents. Failure to comply would revive the impugned order of assessment.

The Court directed the petitioner to deposit the tax liability concerning the disputed issues and submit objections with supporting documents. The respondents agreed to reconsider the objections after affording a reasonable opportunity for a hearing. Failure to comply within the stipulated period would result in the revival of the impugned order of assessment. The Writ Petition was disposed of with no costs awarded, and connected miscellaneous petitions were closed.

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