2023 (4) TMI 497

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....d by the respondent no.3 as well as the order in appeal dated 13.07.2021 preferred against the order dated 03.06.2021. 4. The facts in brief are that the petitioner is a partnership concern and is duly registered with the GST Department. The petitioner claims that all the inwards and outwards supply was duly reflected on the portal of the department and the petitioner uploaded the supply made by him in GSTR-1 and after claiming the Input Tax Credit as reflected in GSTR-2A, filed his return in the form of GSTR-3B claiming the benefit of Input Tax Credit. It is argued that the returns filed were accepted and were never questioned and no proceedings were initiated in the case of the petitioner. 5. It is argued that an inspection was carr....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....column of grounds for issuance of the show cause notice, it was again mentioned that "Adverse material found in SIB". The petitioner further argues that yet another notice was issued calling upon the petitioner to submit reply by 24.12.2020. In the said notice also, the report of the SIB was mentioned. It is argued that in all the notices, there is a reference to the SIB report, which was the foundation for issuance of the notice under Section 74, however, the said report was never supplied to the petitioner. Despite that, the petitioner submitted his reply on 08.01.2021. It is specifically alleged that neither at the time of issuance of show cause notice nor on the date of hearing any evidence whatsoever was adduced against the petitioner,....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....er argues that in terms of the mandate of Section 74, it is essential that the demand of tax be quantified after considering the supply of goods, the time and value of supply and after recording that the petitioner did not pay the tax, which he was required to pay. He further argues that from the perusal of the order of the adjudicating authority as well as the appellate authority, it is clear that while adjudicating the issues, the department has assessed the demand and penalty on the basis of the best judgment assessment which is possible only when recourse is taken to Section 62 and the said best judgment assessment procedure is neither prescribed nor contemplated under Section 74. 9. The Counsel for the petitioner further argues that....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... Act confers the power on the authorized officers with regard to the inspection, search, seizure and arrest and Chapter XV prescribes for demands and recovery in respect of the tax not paid or short paid or erroneously refunded or input tax credit wrongly availed. The distinction between assessment under Sections 73 and 74 is that Section 73 prescribes for normal determination of tax and Section 74 prescribes for determination of tax not paid for the reasons of fraud, willful misstatement or suppression of facts coupled with intent to evade payment of tax. It is clear in the present case that department has taken recourse to Section 74 for assessing the demand of tax and penalty leviable. 13. The sole basis for issuance of the show cause....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....urnished contain discrepancies and the assessee fails to take corrective measures in respect of the said discrepancies. 15. For taking recourse to Section 74, it is essential that along with search and seizure report, certain specific averment is made with regard to the supply of goods and the non-payment of tax coupled with the fact that the same should be by reasons of fraud, willful misstatement or suppression of facts and an intent to evade the tax. The adjudicating authority clearly erred in assessing and quantifying the demand and levying the penalty by taking recourse to some guidelines issued by the Income Tax Authorities which is impermissible while determining the tax liability under Section 74. The order of the appellate autho....