Turnover reassessment and GST appellate enhancement reversed; matter remanded for fresh hearing on turnover and tax rate.

Violation of natural justice found where appellate authority enhanced petitioners taxable turnover without putting the issue to the petitioner, depriving opportunity to rebut; consequence: appellate findings on increased turnover and taxation in the 18% category are set aside to that extent and remitted for reconsideration with an opportunity to be heard. Appellate reliance on a figure from GSTR-3B without accounting for corrected entries in GSTR-9/GSTR-9C was identified as a failure to apply mind, requiring fresh adjudication on that aspect. Of three adjudication-stage grounds, two were admitted by the petitioner and one was annulled by the appellate authority.

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Issues: (i) Whether the appellate authority lawfully enhanced the petitioners tax liability by adding to the petitioners turnover of taxable supply when that issue was not raised in the adjudication order, without giving the petitioner an opportunity to meet and rebut the appellate authoritys contention, and whether the appellate order ought to be set aside to that extent.

Analysis: The adjudication order and the intimation notices underlying the show cause notice confined the dispute to three grounds: tax short paid on outward supplies, tax payable on inward supplies (RCM), and reversal of ITC. The question of increasing the petitioners turnover of taxable supply did not feature in the adjudication order. The second proviso to section 107(11) obliges adherence to procedure where an appellate authority contemplates enhancing tax liability beyond matters agitated in the adjudication. The appellate authoritys addition to turnover was based on a GSTR-3B figure without addressing the petitioners contention that the figure had been corrected in subsequent returns (GSTR-9/GSTR-9C). The petitioner was not afforded an opportunity to file a response to the new contention and the rectification application filed by the petitioner was rejected without such reconsideration. Given these defects, limited interference is required to ensure the appellant is heard and the matter reconsidered on the available material in accordance with law.

Conclusion: The appellate authoritys observations and conclusions insofar as they increased the petitioners turnover of taxable supply and imposed tax thereon are set aside. The matter is remanded to the appellate authority for limited reconsideration of that aspect after giving the petitioner an opportunity to file an additional reply and for consideration of the rectification application. The appellate authority shall decide the matter independently in accordance with law.

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