2025 (12) TMI 1728 - HC - GST

GST turnover mismatch between income-tax portal declarations and bank receipts u/s74, assessment orders set aside for fresh review.

The dominant issue was whether GST assessment orders under s.74 could be sustained when liability was founded substantially on turnover declared on the ... Challenge to assessment orders in DRC-07 dated 08.11.2024 passed for the respective tax periods by the respondent under Section 74 of the respective GST enactments - inflated and padded return of income filed by the petitioner for the respective tax periods before the Income Tax Department - HELD THAT:- Considering the huge difference between the bank receipts amounting to Rs. 27,89,45,705/- and the turnover reported in the Income Tax portal at Rs. 1,66,93,09,862/-, the records of the petitioner requires forensic examination to determine whether the petitioner actually had such a high turnover during the relevant periods in dispute, and whether liability can be fastened solely on the basis of the turnover declared by the petitioner in the Income Tax Portal - the respondent has informed that the GST Department’s audit team has been directed to expeditiously carry out the forensic examination of the transactions. At this stage, Revenue has informed that the GST Department’s audit team has been directed to expeditiously carry out the forensic examination of the transactions. Considering the fact that the assessment orders dated 13.09.2023, which were earlier passed, have now been superseded by the impugned orders dated 08.11.2024, as modified on 11.11.2024, this Court is inclined to dispose of these cases by remitting back to the concerned respondents to pass fresh orders on merits, subject to the fulfilment of conditions imposed - petition disposed off. Issues: Whether the impugned assessment orders under Section 74 (confirming demand based on turnover declared on the Income Tax portal) are sustainable or require fresh consideration including forensic examination of the petitioner’s records; and whether interim relief in the form of lifting bank attachment subject to pre-deposit should be granted.Analysis: A substantial discrepancy exists between bank receipts and turnover declared on the Income Tax portal, creating a factual dispute on whether inflated turnover was declared solely for tendering purposes or reflects actual supplies. The prior order remanded earlier assessments and the present reassessment requires verification of records. Given the magnitude of the difference, a forensic audit of physical and electronic books, with full cooperation from the petitioner (including passwords and cash records), is necessary to determine actual turnover. The department’s audit wing is directed to complete the examination preferably within three months. In view of the second round of litigation and the department being deprived of amounts recoverable via appeal, a conditional interim arrangement is imposed: the petitioner must make a pre-deposit within a fixed period, upon which attachment will be lifted and fresh adjudication will follow, with the petitioner having an alternative appellate remedy and the department preserving its right to proceed after audit.Conclusion: Writ petitions are disposed by remitting the matters to the respondents for fresh orders after an audit/forensic examination of records; petitioner to cooperate fully; petitioner to deposit Rs. 30,00,000 within eight weeks; upon deposit the bank attachment shall be lifted; respondents to pass appropriate orders on merits after audit and personal hearing within the prescribed timeframe.Ratio Decidendi: Where there is a large discrepancy between declared turnover and bank receipts, liability under GST statutes should not be conclusively fixed solely on Income Tax portal declarations without forensic examination of the assessee's physical and electronic accounting records; fresh adjudication post-audit is required and conditional interim relief may be granted subject to pre-deposit.