Case Law Details
Perfect Assayers Private Limited Vs State Tax Officer (ST) (Madras High Court)
The Madras High Court recently reviewed and set aside a GST order that failed to consider critical submissions by Perfect Assayers Private Limited. The order, dated September 28, 2023, was contested by the petitioner on the grounds that their reply to the show cause notice was overlooked. The court’s judgment highlighted significant procedural lapses and emphasized the necessity of a fair reassessment.
Introduction
In the case of Perfect Assayers Private Limited versus the State Tax Officer (ST), the petitioner challenged the original order passed by the tax authorities on September 28, 2023. The core issue revolved around discrepancies between the petitioner’s GSTR 3B returns and their GSTR 1 and GSTR 9 statements, which the petitioner claimed were due to unaccounted credit notes and discrepancies in supplier invoices. The petitioner argued that their responses and evidence were not adequately considered, leading to an unjust tax assessment.
Detailed Analysis
Upon receiving a show cause notice dated April 27, 2023, the petitioner responded on May 26, 2023, explaining the discrepancies noted between their GSTR 3B returns and GSTR 1 statement. They attributed the mismatch to the non-inclusion of credit notes amounting to ₹68,91,320/-. Additionally, the variation between their GSTR 3B and the auto-populated GSTR 2A was attributed to a supplier, S.M. Network, not reflecting certain invoices.
The petitioner provided substantial documentation, including the GSTR 1 statement, the annual return in GSTR 9, and the relevant invoices, to support their claims. Despite these submissions, the impugned order was issued without addressing the petitioner’s explanations or the accompanying evidence.
The petitioner’s counsel pointed out that the operative portion of the impugned order lacked reasoning. The order stated that the petitioner failed to respond to the intimation and subsequent show cause notice adequately. However, the counsel argued that the petitioner had indeed replied with supporting documents that were ignored.
The Government Advocate, representing the respondent, acknowledged the petitioner’s notice of discrepancies but argued that the petitioner failed to provide adequate supporting documents, thus justifying the tax assessment confirmation.
Upon reviewing the case, the Madras High Court found the impugned order deficient in addressing the petitioner’s explanations and evidence. The court emphasized that the order was issued without a detailed discussion of the reasons for rejecting the petitioner’s explanations regarding the discrepancies.
Conclusion
The Madras High Court, recognizing the procedural lapses, set aside the impugned order dated September 28, 2023. The court directed the respondent to reconsider the case, provide a reasonable opportunity for the petitioner to be heard, including a personal hearing, and issue a fresh order within three months.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
An order in original dated 28.09.2023 is assailed on the ground that the petitioner’s reply to the show cause notice was not taken into consideration. Upon receipt of show cause notice dated 27.04.2023 alleging mismatch between the petitioner’s GSTR 3B returns and the GSTR 1 statement as well as between the petitioner’s GSTR 3B returns and the auto-populated GSTR 2A, the petitioner replied on 26.05.2023. The impugned order was issued in these facts and circumstances on 28.09.2023.
2. Learned counsel for the petitioner invited my attention to the show cause notice and the reply thereto. As regards the discrepancy between the GSTR 3B return and GSTR 1 statement, learned counsel pointed out that such mismatch was on account of not taking into account the value of credit notes. By drawing reference both to the GSTR 1 statement and the annual return in GSTR 9, learned counsel pointed out that the total value of credit notes of Rs.68,91,320/- is mentioned therein. As regards the variation between the GSTR 2A and GSTR 3B, learned counsel pointed out that such difference was on account of one supplier, S.M. Network, not reflecting the invoices in returns filed by such supplier. Learned counsel also pointed out that the annual return and the relevant invoices were enclosed with the reply to the show cause notice. By turning to the impugned order, learned counsel points out that the petitioner’s explanation and the relevant documents were not taken into consideration.
3. Mr. V. Prashanth Kiran, learned Government Advocate, accepts notice for the respondent. By inviting my attention to the show cause notice, learned counsel points out that the petitioner was put on notice about the mismatch and called upon to produce relevant documents. Since the petitioner failed to provide supporting documents, he submits that the tax proposal was confirmed.
4. In the reply to the show cause notice, the petitioner has explained the alleged discrepancy between the GSTR 3B and GSTR 1 by pointing out that the discrepancy is on account of not reckoning the total value of credit notes. The petitioner has placed on record the GSTR 1 statement and the annual return in GSTR 9. Both these documents reflect the total value of credit notices as Rs.68,91,320/-. As regards the variation in input tax credit between the GSTR 3B returns of the petitioner and the auto-populated GSTR 2A, the petitioner has explained the difference by pointing out that one of the suppliers, S.M. Network, did not reflect invoices for supplies made by such supplier. The relevant invoices were enclosed with the reply. In this context, it is pertinent to examine the impugned order. The operative portion of the impugned order is as under:
“The tax payer failed to reply the intimation as in the reference third cited.
In continuation of the intimation, as per Rule 100(2) & 142(1)(a) of CGST Act 2017, show cause notice in DRC01 is issued to the Tax payer as in the reference fourth cited.
The reply filed by the taxpayer without any supporting documents as in the reference 4th cited. In order to take further action, one reminder notice was sent to them with personal hearing but they failed to pay the tax.
Hence an Assessment order issued under Section 73 of CGST ACT 2017 with tax, interest and penalty as due for payment.”
The above operative portion is bereft of reasons. In spite of the petitioner’s GSTR 1 statement and the annual return in GSTR 9 being available, no reasons are specified as to why the petitioner’s explanation was rejected. Even with regard to the discrepancy between the petitioner’s GSTR 3B returns and the auto-populated GSTR 2A, in spite of the petitioner enclosing the relevant invoices to explain the discrepancy, the impugned order does not discuss the explanation and record reasons for rejecting the same. Consequently, the impugned order cannot be sustained.
5. For reasons set out above, the impugned order dated 28.09.2023 is set aside and the matter is remanded for reconsideration. The respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within three months from the date of receipt of a copy of this order.
6. W. P. No. 12083 of 2024 is disposed of on the above terms. Consequently, WMP Nos.13177 & 13179 of 2024 are closed. No costs.
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