GST demand confirmed without chance to submit supporting documents; order quashed, case remanded after 25% deposit condition

The dominant issue was whether confirmation of the proposed GST demand without granting a further opportunity to furnish supporting documents warranted interference. Applying its consistent approach in comparable cases, the HC held that principles of natural justice required permitting the taxpayer to file a detailed reply with documents before a fresh merits determination. Consequently, the impugned order confirming the demand was quashed and the matter remitted to the tax authority for a fresh order on merits, conditional on the petitioner depositing 25% of the disputed tax in cash within 30 days and filing the detailed reply; upon compliance, any bank account attachment already effected would stand automatically vacated.

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1. ISSUES PRESENTED AND CONSIDERED

(i) Whether the confirmed demand arising from the show cause notice for the relevant tax period should be set aside and the matter remitted for a fresh decision on merits, in view of the petitioner's request for one more opportunity to explain the mismatch with supporting documents.

(ii) Whether remand should be made conditional upon a pre-deposit of 25% of the disputed tax (in cash from the Electronic Cash Register) and, upon such compliance, whether any bank account attachment should stand vacated and recovered amounts adjusted towards such pre-deposit.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Quashing of the impugned confirmation order and remand for fresh adjudication on merits

Interpretation and reasoning: The Court noted that the impugned order confirmed the demand proposed in the show cause notice for the stated tax period, and that the petitioner had submitted a reply whose contents were extracted in the impugned order. The petitioner asserted that the mismatch arose from genuine mistakes in return reporting (including double entry and human error) and sought one more opportunity to explain the case with supporting documents. The Court, recording these submissions and following a consistent view adopted in similar circumstances, considered it appropriate to set aside the impugned order and remit the matter for a fresh decision on merits, conditioned by safeguards to protect revenue.

Conclusions: The Court quashed the impugned order and remitted the matter to the respondent to pass a fresh order on merits, upon the petitioner filing a detailed reply with supporting documents, with the respondent directed to decide expeditiously, preferably within three months from such reply/pre-deposit.

Issue (ii): Conditional pre-deposit, adjustment of recovered amounts, and vacation of bank attachment

Interpretation and reasoning: The petitioner undertook to deposit 25% of the disputed tax. The Court accepted this as an appropriate condition for remand, directing that the deposit be made in cash through the petitioner's Electronic Cash Register within thirty days of receipt of the order. The Court further ensured that any amounts already recovered/paid towards the confirmed liability would be adjusted towards the 25% pre-deposit, subject to verification. On the question of bank attachment, the Court ordered that, subject to compliance with the stipulated deposit and where the petitioner was not in arrears of any other amount barring the disputed demand, any bank account attachment already made would stand automatically vacated, and bank attachment would be lifted upon deposit.

Conclusions: Remand was made conditional upon deposit of 25% of disputed tax within thirty days and filing of a detailed reply with documents; any prior recoveries/payments were to be adjusted towards this pre-deposit (subject to verification); and bank attachment, if any, was to be lifted/automatically vacated upon compliance and absence of other arrears. If the petitioner failed to comply with any stipulation, the respondent was permitted to proceed to recover the tax in accordance with law as if the petition had been dismissed, with due notice before taking such steps.

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