Central Goods and Services Tax Act, 2017, Section 73
Determination of tax--No
opportunity given to contest tax demand--Validity of
Conclusion: Where
assessee was not given reasonable opportunity to contest tax demand, the
assessment order passed was to be quashed.
Revenue passed assessment order under section 73 of the Act
due to disparity between GSTR-3B and GSTR- 2A returns. The assessee submitted
that it was unable to contest the tax demand on account of being unaware of
proceedings. Further, the Circulars issued by the CBIC regarding procedure to
be adopted in case of disparity between GSTR-3B and GSTR- 2A returns was not
adhered to by the Revenue. Held: The entire tax demand pertained
to disparity between the input tax credit claimed in the GSTR-3B return and that
reflected in the auto populated GSTR-2A returns. The assessment order did not
indicate that the transaction was not genuine. Further, the applicable
Circulars were not adhered to in this regard. Therefore, the assessee was to be
given an opportunity to contest the tax demand. Accordingly, the impugned
assessment order was quashed subject to remittance of 10% of the disputed tax
demand by the assessee.
Decision: In favour
of assessee
IN THE MADRAS HIGH COURT
SENTHILKUMAR RAMAMOORTHY
Sri Lakshmi Silvers v. STO
W.P. No. 6196 of 2024 And W.M.P. Nos. 6864 &
6866 of 2024
11 March, 2024
Petitioner by: V. Srikanth
Respondent by: K.
Vasanthamala, GA (T)
An assessment order dated 11-7-2023 is assailed both on
grounds of breach of principles of natural justice and on the ground that
applicable circulars with regard to the procedure to be followed in cases of
discrepancy between the GSTR-3B returns and the auto populated GSTR-2A returns
were not adhered to.
2. The petitioner is a
registered person under applicable GST enactments and engaged in the business
of supply of base metals. In respect of assessment year 2019-20, the petitioner
had received supplies and claimed ITC in respect thereof. Pursuant to a notice
in Form GST ASMT-10, the petitioner also received an intimation and show cause
notice. The petitioner was unable to respond to the intimation and show cause
notice because the petitioner was not aware of the same since the petitioner
was entirely dependent on his accountant and was not informed about the above.
The impugned assessment order was issued in the above facts and circumstances.
3. Learned counsel for the
petitioner submits that the petitioner did not have an opportunity to contest
the tax demand. He also submits that circulars were issued by the Central Board
of Indirect Taxes and Customs with regard to the procedure to be adopted in
case there is disparity between the GSTR-3B returns and the GSTR- 2A returns.
He contends that this procedure was not adhered to in the case at hand. On
instructions, he submits that the petitioner is agreeable to remit 10% of the
disputed tax demand as a condition for remand.
4. Mrs.K.Vasanthamala,
learned Government Advocate, accepts notice on behalf of the respondent. From
the impugned assessment order, it is evident that the entire tax demand
pertains to the disparity between the ITC claimed in the GSTR-3B return and
that reflected in the auto populated GSTR-2A returns. The impugned assessment
order does not indicate that the transaction was not genuine. Learned counsel
for the petitioner also contended that applicable circulars were not adhered to
in this regard. In these circumstances, albeit by putting the petitioner on
terms, I am of the view that the petitioner should be provided an opportunity
to contest the tax demand.
5. Therefore, the impugned
assessment order is quashed subject to the condition that the petitioner remits
10% of the disputed tax demand as agreed to within a maximum period of two
weeks from the date of receipt of a copy of this order. The petitioner is
also permitted to file a reply to the show cause notice within the aforesaid
period. Subject to receipt of the reply and upon being satisfied that 10% of
the disputed tax demand was received, the assessing officer is directed to
provide a reasonable opportunity, including a personal hearing, and issue a
fresh assessment order in accordance with law within a maximum period
of two months thereafter.
6. W.P.No.6196 of 2024 is disposed of on the above terms. No costs. Consequently, W.M.P.Nos.6864
and 6866 of 2024 are closed.