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 income-tax portal despite a large disparity with bank receipts, warranting verification. The HC held that, given the significant mismatch between bank receipts and the reported turnover, the taxpayer's records required forensic examination to ascertain the actual turnover and whether tax liability could be fastened solely on the income-tax declaration; the department had already directed an audit team to conduct such examination. Consequently, since the impugned orders had superseded earlier orders, the HC set aside the impugned assessment orders and remitted the matter to the proper officer to pass fresh orders on merits subject to imposed conditions, disposing of the petitions.

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ISSUES PRESENTED AND CONSIDERED

1) Whether the assessment determining tax, interest and penalty by relying primarily on turnover figures reflected in the Income Tax portal (as against GST returns and bank receipts) could be sustained without a deeper verification of the petitioner's actual supplies/turnover for the disputed period.

2) Whether, in the circumstances of the second round of litigation, the appropriate relief was to remit the matter for a fresh determination after an audit/forensic examination, and if so, on what conditions, including cooperation in audit, time-bound completion, pre-deposit, and lifting of bank attachment.

ISSUE-WISE DETAILED ANALYSIS

Issue 1: Sustainability of the assessment based substantially on Income Tax portal turnover mismatch

Legal framework (as discussed): The Court noted that the impugned assessment orders were passed under Section 74 and included interest and penalty under Sections 50 and 74 of the applicable GST enactment. The Court did not finally adjudicate the taxability on merits but examined whether the existing basis for quantification warranted interference at this stage.

Interpretation and reasoning: The Court considered the petitioner's assertion that Income Tax portal turnover was "padded and inflated" and the department's conclusion of a substantial mismatch between GST annual returns and Income Tax portal figures. The Court found that, given the "huge difference" between bank receipts and the Income Tax portal turnover, the petitioner's records required forensic examination to determine whether such higher turnover actually existed and whether liability could be fastened solely on the Income Tax portal declaration. The Court expressly held that the matter "requires a fresh look" and that proper verification was necessary before confirming liability on that basis.

Conclusion: The Court declined to uphold the assessment as it stood and held that the turnover issue could not be conclusively determined without an audit/forensic examination of records. The assessment orders were therefore not allowed to stand and the matter was remitted for fresh determination on merits after such examination.

Issue 2: Whether remand with audit directions, pre-deposit, and conditional lifting of bank attachment was warranted

Legal framework (as discussed): The Court acted within writ jurisdiction to craft relief by remitting the matter, directing an audit by the department's auditing wing, and imposing a monetary condition in light of the case being in a second round and the department being deprived of sums that might have been secured through appellate pre-deposit.

Interpretation and reasoning: The Court noted that earlier assessments had been set aside and remanded, and that the present impugned orders superseded the earlier ones. Given the continued dispute on the core factual foundation (actual turnover/supplies), the Court found remand appropriate but conditioned it to ensure effective verification and to balance revenue interests. It required the petitioner's full cooperation, including furnishing all data/documents (including passwords) for forensic review of physical and electronic books, and production of cash books and other records without suppression. It also required the audit team to complete the exercise preferably within three months. Considering this was the second round of litigation, the Court additionally ordered a pre-deposit of Rs. 30,00,000 within eight weeks. To mitigate coercive recovery, it directed that upon such deposit, the bank attachment would stand automatically lifted, and the deposited amount would be transferred to the GST Department.

Conclusion: The Court disposed of the writ petitions by remitting the matter for fresh orders on merits after a time-bound audit/forensic examination, imposed mandatory cooperation obligations on the petitioner, ordered a specified pre-deposit within a fixed period, and directed conditional, automatic lifting of bank attachment upon payment and intimation by the department.

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