Non-consideration of material GST defences renders a demand order unsustainable; matter remitted for fresh reasoned adjudication.

A GST demand on furnishing a corporate guarantee to a related entity was found vulnerable because the adjudicating authority ignored the assessee's reply and the applicable valuation circulars. The assessee had argued that the recipient was eligible for full input tax credit and that the transaction value was nil because no invoice was issued. The court treated the omission to consider a material defence as non-application of mind, set aside the order, and remitted the matter for fresh consideration and a reasoned decision on all reply contentions.

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Issues: Whether the GST demand order levying tax on furnishing of corporate guarantee to a related entity could be sustained when the assessee's reply and the applicable circulars were not considered.

Analysis: The assessee had specifically relied upon the GST circulars dealing with valuation where the recipient is eligible for full input tax credit and contended that the transaction value was nil as no invoice was issued. The order, however, did not deal with those contentions at all. An adjudication which omits consideration of a material defence raised in reply is vulnerable on the ground of non-application of mind.

Conclusion: The impugned order was set aside and the matter was remitted to the assessing authority for fresh consideration of all the contentions raised in the reply and for passing a reasoned order on merits.

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