Case Law Details
Geetha Pharma Vs Assistant Commissioner (ST) (Madras High Court)
In a significant ruling, the Madras High Court has set aside a GST order due to issues related to supplier declarations and tax rate discrepancies. The case, Geetha Pharma Vs Assistant Commissioner (ST), highlights critical procedural and documentation considerations in GST assessments.
Background of the Case
The case revolves around an order dated December 30, 2023, challenged by Geetha Pharma concerning two specific tax proposals. The assessment period in question is 2017-18, with proceedings initiated via a show cause notice on September 23, 2023. The petitioner, Geetha Pharma, responded to the notice on December 25, 2023, leading to the issuance of the impugned order on December 30, 2023.
Defect No. 1: Supplier Declarations
The primary contention in this case involves defect no. 1, where the petitioner argued that the supplier declarations were submitted but not considered by the assessing officer. The declarations from Meena Corporates, Sri Amman Ambigai Agencies, and Mankind Pharma Limited were cited as crucial evidence. The petitioner’s counsel presented screenshots and other documentation to support the claim that these declarations were indeed submitted.
The court noted that the petitioner’s reply to the show cause notice explicitly referenced these supplier declarations as enclosures for defect no. 1. Despite the government advocate’s argument that the declarations were not submitted, the court found prima facie evidence suggesting otherwise. As a result, the court deemed it necessary for the assessing officer to verify these documents, warranting a remand for further examination.
Defect No. 8: Tax Rate Discrepancy
The second significant issue pertained to defect no. 8, where the show cause notice specified a tax rate of 12%, while the impugned order applied an 18% tax rate. The petitioner’s counsel contended that this discrepancy was unjustified. The government advocate argued that the correct GST rate for the concerned credit notes was 18%. The court acknowledged the petitioner’s grievance regarding the tax rate and directed that the liability should be discharged at the 12% rate as initially proposed in the show cause notice.
Conditions for Remand
The court imposed specific conditions for the remand. Firstly, the petitioner must discharge the liability at the 12% GST rate concerning the disputed credit notes. Additionally, the petitioner accepted the imposition of a penalty for defect no. 2, which also needs to be paid as a condition for remand. These conditions aim to ensure compliance while allowing for a thorough re-assessment of the contested defects.
Conclusion
The Madras High Court’s decision to set aside the GST order in Geetha Pharma Vs Assistant Commissioner (ST) underscores the importance of accurate documentation and procedural adherence in GST assessments. By directing a re-adjudication, the court has provided an opportunity for a fair and thorough examination of the supplier declarations and tax rate discrepancies. This ruling serves as a critical reminder for businesses and tax authorities alike to ensure meticulous compliance with GST regulations and proper consideration of all submitted evidence.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
An order in original dated 30.12.2023 is challenged only insofar as two tax proposals are concerned. In respect of assessment period 2017-18, proceedings were initiated against the petitioner by issuing a show cause notice dated 23.09.2023 in respect of eight defects. The petitioner replied to the show cause notice on 25.12.2023. The impugned order was issued in these facts and circumstances on 30.12.2023.
2. Learned counsel for the petitioner submits that the findings in respect of defect no.1 are liable to be set aside in as much as the petitioner had submitted declarations from the suppliers concerned, but such declarations were not taken into account by the assessing officer. In order to substantiate this contention, learned counsel referred to the declarations of Meena Corporates, Sri Amman Ambigai Agencies and Mankind Pharma Limited. He also pointed out that the reply of the petitioner refers to the suppliers’ declarations as an enclosure to defect no.1. He also placed on record the screen shot in respect of uploading the said documents.
3. As regards defect no.8, learned counsel points out that the tax proposal in the show cause notice specified a tax rate of 12%, whereas the tax rate of 18% is specified in the impugned order.
4. Mr. V. Prasanth Kiran, learned Government Advocate, accepts notice for the respondent. He submits that the petitioner’s reply was duly taken into consideration by the assessing officer and most of the tax proposals were dropped upon such consideration. With regard to the submission of supplier certificates, learned Government Advocate submits, on instructions, that such supplier declarations were not submitted by the petitioner to the assessing officer. As regards credit notes, he submits that the appropriate GST rate is 18% and that the petitioner has admitted that credit notes of the value of Rs.35,57,054/- were reported, whereas a deduction of Rs.66,51,937/-was reflected in the petitioner’s annual returns towards credit notes.
5. The petitioner has placed on record the supplier declarations. The reply to the show cause notice makes reference to the supplier declarations as an enclosure for defect no.1. Even the impugned order refers to the petitioner’s reply and the reference thereto to the supplier declarations. In these circumstances, it appears prima facie that the supplier declarations were submitted by the petitioner. However, this is a matter to be verified by the assessing officer, and a remand is warranted.
6. As regards credit notes, upon examining the petitioner’s GSTR 1 statement, the assessing officer recorded a factual finding that credit notes of the aggregate value of Rs.35,57.054/- were reported, whereas, deduction was claimed to the extent of Rs.66,51,937/-. This conclusion has not been contested by the petitioner. The only grievance in this regard is with regard to the GST rate. Therefore, the petitioner should discharge liability in this regard at the GST rate of 12% as a condition for remand. In addition, the petitioner also accepted the imposition of penalty in respect of defect no.2. This amount is also to be paid as a condition for remand.
7. Subject to the conditions set out in the preceding paragraph, impugned order dated 30.12.2023 is set aside only insofar as it pertains to defect no.1 and defect no.8 and the matter is remanded for re-consideration. After providing a reasonable opportunity to the petitioner, including a personal hearing, the respondent is directed to issue a fresh order with regard to the above mentioned two defects.
8. W.P.No.14946 of 2024 is disposed of on the above terms. No costs. Consequently, W.M.P.Nos.16220 and 16221 of 2024 are closed.
Author Bio
