Adhoc demand of GST on indirect expenses in GST scrutiny

[VENKAT S]

In GST assessment for FY 17-18, the AO has raised a demand of 18% on a portion of indirect expenses but no reference to the act/rule under which the demand is raised is mentioned.
Is this allowed? if this order to be appealed, then what grounds of appeal are available to the assessee?

The extract from the order is :

' The tax payer has furnished the abstract details of other expenses for Rs ______. The details are verified and accepted except the following expenses which are disallowed.

Repairs to building Rs 435482 Tax payable @ 18% - Rs 78386

Repairs to machinery Rs 351719 Tax payable @ 18% - Rs 63309 '

Any suggestions or guidance is welcomed.

[Ganeshan Kalyani]

Sir, have you claimed ITC on these expense?

[KASTURI SETHI]

Without mentioning  Act, Section, Rule in the Adjudication Order, Order-in-Original is legally invalid. You can take shelter of case laws.

[Shilpi Jain]

This order/notice is a fate of only being quashed.

[Sadanand Bulbule]

Dear all

Of late it has become a trend to foist tax even without discussing the details of relevant notification, HSN or SAC to draw the source of taxable event and rate of tax. And it is the fact that in some states despite producing/uploading the requisite documents, the orders simply say they are not produced for different reasons.

Tax regimes are changing but not taxman's mindset. There is nothing new under the Sun.

[KASTURI SETHI]

Sh. Sadanand Bulbule Ji,

Sir, I agree with your outpourings but it shows either lack of knowledge or prejudiced and biased mind of the Adjudicating Authority who passed the order. If the querist has factually expressed, then the Adjudicating Authority has flouted the principles of natural justice and instructions issued in Board’s Master Circular no. 1053/2/2017-CX., dated 10-3.2017 like anything. The party has been pushed into litigation.

[Sadanand Bulbule]

Dear Sirji

Your thoughtful comments are absolute facts. Two days back, I have filed six rectification applications under Section 161 of the CGST Act exactly on the same grounds. Ego is the backbone of such unfortunate orders and merits are mercilessly thrown in the garbage bin. This is the continuous by-product of GST regime. My salute to taxpayers' tolerance!

[Ganeshan Kalyani]

Now a day, Govt is working like a Corporate office where there is revenue target which makes the authority to work like this.

[KASTURI SETHI]

 An EXTRACT FROM CBEC's EXCISE MANUAL OF SUPPLEMENTARY INSTRUCTIONS, 2005 ISSUED ON 17.05.2005  BY CBEC, NEW DELHI

1. The  Order portion  in  the Adjudication Order must contain  correct provisions of law under which duty is confirmed  and penalty is imposed.

2. The Adjudication Order must be a speaking order giving clear findings of   the Adjudicating Authority  and he/she shall discuss each point raised by the defense and shall give cogent reasoning  in case of rebuttal of such points.

                 ( Emphasis is laid on  bold words.)

[Sadanand Bulbule]

Dear all

Unless & until taxpayers legally rebel against egoistic and unlawful orders, justice cannot be reclaimed easily. It is disgusting to see such perennial worthless orders disrespecting the laws and judicial rulings. By the way, such orders are not accidental but by choice.

"Touch of truth makes the authority irritating". So the speakers of truth are more hated than ever before. But the tendency is no authority cares for truth. The simple reason is, of late they are  only  "Revenue Authorities" and not "Quasi-judicial authorities".

Time bends everything and everyone. Let's have tolerance.

AI Summary

Invalid adjudication orders: demands without cited legal basis breach natural justice and invite appeal or rectification. Tax was assessed on indirect expenses without citing the statutory or rule basis and without reasoned findings. Such omission raises issues of adjudicatory validity, breach of natural justice and lack of a speaking order, providing grounds for appeal or rectification where the authority failed to address entitlement to input tax credit and relevant classification or notifications.