2025 (4) TMI 303 - HC - GST

Tax Order Quashed: Authorities Must Provide Reasoned Decision and Fair Hearing for Taxpayer Within 3 Months

Masany Construction Equipment Pvt. Ltd. Versus State Tax Officer, Deputy Commissioner Of State Tax and Goods And Services Tax Network (GSTN), Delhi

Kerala HC allowed a writ petition challenging a tax order under CGST Act. The court set aside the impugned order due to lack of a proper reasoned ... Challenge to order issued under Section 73(9) of the Central Goods and Service Tax Act, 2017 - mismatch between GSTR-1 and GSTR-3B filings - non-speaking order - no opportunity of hearing was granted to the petitioner - violation of principles of natural justice - HELD THAT:- On a perusal of the impugned order, it is noticed that though the petitioner had submitted Ext.P5 reply, the same has been discarded by one sentence that “the reply is not convincing and is found non- explanatory”. Of course, pursuant to the reply notice, an opportunity of hearing was granted to the petitioner but he failed to avail the said opportunity. Notwithstanding the said failure to appear is not a speaking order. The State Tax Officer ought to have issued a speaking order. Discarding a reply by a mere sentence that it is not convincing cannot amount to a speaking order. This is all the more so, as the petitioner had specifically stated that there is no tax liability and that the mistake occurred due to an error in entering the data. It was always open for the officer to have verified whether the mistake was bonafide and if required even call for the records or peruse the records available with the officer. The Ext.P1 being a non-speaking order is liable to be interfered and an opportunity of hearing be granted to the petitioner. Ext.P1 order is set aside and the first respondent is directed to reconsider the matter after granting an opportunity of hearing to the petitioner - Petition allowed. In the case before the Kerala High Court, the petitioner contested the order issued under Section 73(9) of the Central Goods and Services Tax Act, 2017 (CGST Act), which imposed a tax, interest, and penalty totaling Rs.22,42,024/-. The petitioner, a taxpayer under the CGST Act involved in the supply of construction equipment and machinery, faced a show cause notice for a mismatch between GSTR-1 and GSTR-3B filings for the financial year 2019-20. The petitioner attributed the discrepancy to a mistake in the GSTR-1 entry for an invoice dated 02.10.2019, which was corrected in subsequent GSTR-3B filings, asserting no tax liability due to available Input Tax Credit (ITC) and no fraudulent intent.The court noted that the impugned order was not a 'speaking order,' as the petitioner's reply was dismissed with a single sentence stating it was 'not convincing and is found non-explanatory.' The court emphasized that a speaking order should have been issued, allowing for verification of the petitioner's claims. Consequently, the court set aside the order and directed the first respondent to reconsider the matter, granting the petitioner an opportunity for a hearing and to present supporting documents. The court mandated that a new order be issued within three months, thereby allowing the writ petition.