2024 (11) TMI 334 - HC - GST

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

M/s. Sri Kaleeswari Stores, Represented by its Partner, R. Venkateshwaran. Versus The Assistant Commissioner, The State Tax Officer (ST), Thanjavur.

HC examined a tax assessment dispute involving ITC discrepancies and procedural violations. The court found the assessment order exceeded the show cause ... Violation of principles of natural justice - Challenge to impugned order on the premise that the impugned order of assessment traverses beyond the show cause notice and also made without granting the petitioner an opportunity to place on record the documentary evidence in support of their objections/submissions/reply - discrepancy between GSTR-2A and GSTR-3B - Denial of ITC on discounts - finance charges - depreciation. Discrepancy between GSTR-2A and GSTR-3B - HELD THAT:- There is merit in the submissions of the learned counsel for the petitioner that the same is made in violation of principles of natural justice, inasmuch as the impugned order of adjudication traverses beyond the show cause notice. It is trite law that show cause notice forms the foundation of the order and an order, which traverses beyond the show cause notice, results in violation of principles of natural justice inasmuch as the party is denied an opportunity to put forth his case. Denial of ITC on discounts - finance charges - depreciation - HELD THAT:- The impugned order proceeds on the basis that the reply filed by the petitioner is not supported by documentary evidence. The learned counsel for the petitioner would submit that the petitioner may be granted one final opportunity before the adjudicating authority to enable them to submit the relevant documentary evidence in support of their objection. The impugned order is set aside. The petitioner shall deposit the tax liability in respect of other three issues, viz., denial of ITC on discounts, finance charges and depreciation, within a period of four (4) weeks from the date of receipt of a copy of this order. On complying with the above condition, the impugned order of assessment shall be treated as show cause notice and the petitioner shall submit its objections in respect of all the four issues, viz., discrepancy between GSTR-2A and GSTR-3B, denial of ITC on discounts, finance charges and depreciation, along with supporting documents/material, within a period of four (4) weeks from the date of receipt of a copy of this order. If any such objections are filed, the same shall be considered by the respondents and orders shall be passed in accordance with law after affording a reasonable opportunity of hearing to the petitioner. Petition disposed off. 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.