2025 (9) TMI 182 - HC - GST

Section 73 GST orders and equal penalty set aside after taxpayer proved outward supplies and breach of natural justice

HC allowed the petition and set aside the orders under section 73 of the GST Act and the equal penalty levy. Proceedings were initiated on the premise of ... Initiation of proceedings u/s 73 of the GST Act - levy of penalty of equal amount - argument pressed before the authorities concerned has not been considered by either of the authorities below - violation of principles of natural justice - HELD THAT:- The record shows that the proceedings under section 73 of the GST Act were initiated against the petitioner on the premise that the petitioner has made inward supply to M/s Shiv Trading Company, Delhi, which firm was found non-existing. On the contrary, the petitioner has brought on record materials, i.e., tax invoice, e-way bill, bank statement and other relating documents, that outward supply was made, to which tax has also been deposited, but without verifying the same the impugned orders have been passed. The record further shows that the argument of the petitioner has been noticed by the first appellate authority in paragraph no. 3 of the appeal, but not a word has been whispered about the same and only reiterated the fact that inward supply has been taken by the petitioner and the firm M/s Shiv Trading Company was not found during the survey. In view of the aforesaid facts & circumstances of the case, the impugned orders cannot be sustained in the eyes of law - Petition allowed. Writ petitions challenged impugned orders dated 15.02.2020 and 22.07.2021 arising from proceedings under section 73 of the GST Act. The petitioner contended the transaction was an outward supply of sugar to M/s Shiv Trading Company (GSTIN 07ACIPL7816P1ZX), supported by tax invoice, e-way bill, bank statement and related documents, whereas authorities proceeded on the premise that the petitioner had taken inward supply from a non-existing firm. The petitioner also argued that a 'penalty of equal amount' cannot be imposed under section 73 and that only up to 10% may be levied. The first appellate authority noted the petitioner's submissions but did not address them substantively, merely reiterating the finding of inward supply and non-existence of the firm. On review of the record the court found the impugned orders were passed without verifying the documentary evidence and held that the orders 'cannot be sustained in the eyes of law.' The impugned orders were quashed and the writ petitions allowed.