Baccarose Perfumes And Beauty Products Pvt. Ltd. & Anr. Vs State of Gujarat & Ors. (Gujarat High Court)
Gujarat High Court has quashed the demand order under Section 74 of the GST Act against Baccarose Perfumes and Beauty Products Pvt. Ltd. The petitioner, operating a Free Trade Warehousing Zone unit in Kandla SEZ, was issued a demand of ₹1.63 crore due to discrepancies between GSTR-1 and GSTR-3B. The issue arose because the GST portal did not reflect IGST payments made via Treasury Challan (TR-6), leading tax authorities to believe the petitioner had unpaid liabilities. Despite multiple replies explaining the discrepancy, the adjudicating officer passed the order without considering the petitioner’s submissions. The court noted that goods supplied from an SEZ unit to a Domestic Tariff Area (DTA) are treated as imports for the DTA unit, making the latter responsible for IGST payment. The petitioner, therefore, had no liability under GST provisions.
The court ruled that the demand was issued without proper reasoning or due consideration of legal provisions. It emphasized that tax assessment must involve adjudication of show-cause notices with due regard to replies and relevant laws. Since the petitioner had not claimed any refund for the IGST paid, the demand was unjustified. The court, finding procedural lapses in the adjudication process, set aside the impugned order without imposing costs.
