Assessment order set aside for denying hearing opportunity on ineligible input tax credit under GSTR TRAN-I

The Madras HC set aside an assessment order dated 22.12.2023 concerning ineligible input tax credit under GSTR TRAN-I due to violation of natural justice principles as no hearing opportunity was provided. The petitioner was directed to deposit 25% of disputed tax within four weeks. Upon compliance, the assessment order would be treated as show cause notice, allowing the petitioner to file objections within four weeks with supporting documents. The respondent must consider objections and pass orders after providing reasonable hearing opportunity. Petition disposed of.

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Summary of the Judgment:

In the case before the Madras High Court, presided over by Justice Mohammed Shaffiq, the petitioner challenged an impugned order dated 22.12.2023, issued under GSTIN:33AACPP7187P1Z0/2017-18, alleging a violation of the principles of natural justice. The petitioner, engaged in the business of retailing industrial hardware, contended that the order was not served properly, as it was merely uploaded on the GST Portal, leaving the petitioner unaware of the assessment.

The petitioner cited a recent judgment, M/s. K. Balakrishnan, Balu Cables vs. O/o. the Assistant Commissioner of GST & Central Excise, where a similar matter was remanded subject to a 25% payment of disputed taxes. The petitioner expressed readiness to pay this amount to gain an opportunity to address the discrepancies.

The court set aside the impugned order, directing the petitioner to deposit 25% of the disputed tax within four weeks. Upon compliance, the order would serve as a show cause notice, allowing the petitioner to submit objections with supporting documents. The respondent must consider these objections and pass orders lawfully, providing a reasonable hearing opportunity. If the deposit or objections are not filed within the stipulated period, the impugned order will be restored. The court also ordered the lifting of bank account attachments following the deposit of the disputed tax. The writ petition was disposed of without costs, and connected miscellaneous petitions were closed.

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