Petitioner availed Lower ITC than GSTR 2A Amounts: conclusion of AO of wrongful ITC availing indicates non-application of mind

Vijaykumar Vs State Tax Officer (Madras High Court)

Petitioner availed Lower ITC Than GSTR 2A Amounts: conclusion of AO of wrongful ITC availing indicates non-application of mind

The recent judgment by the Madras High Court in the case of Vijaykumar vs. State Tax Officer addresses critical issues regarding the availing of Input Tax Credit (ITC) and the discrepancies between self-reported figures and those reflected in the auto-populated GSTR 2A return.

The petitioner, engaged in the supply business, contested an assessment order and subsequent bank attachment notice, claiming ignorance due to being uneducated and computer illiterate. The petitioner argued that discrepancies in claimed ITC versus GSTR 2A figures did not justify the conclusions drawn by the assessing officer, highlighting the remittance of due amounts as evidence of compliance.

The court examined the assessment order and noted the disparity in ITC availed by the petitioner compared to the auto-populated GSTR 2A. It deemed the conclusion of wrongful ITC availing as indicative of non-application of mind. Additionally, the court scrutinized the interest liability for belated return filing, acknowledging the petitioner’s timely remittance of dues.

In light of the discrepancies and procedural lapses, the Madras High Court quashed the assessment order, remanding the matter for reconsideration by the assessing officer. The petitioner was granted the opportunity to respond to the show cause notice, ensuring principles of natural justice. Moreover, the court directed the release of the attached bank funds pending the outcome of the reassessment proceedings.

This judgment underscores the significance of diligent assessment procedures and adherence to natural justice principles in tax matters, providing clarity on the interpretation of tax laws and ensuring fair treatment for taxpayers.

FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT

The petitioner assails both an assessment order dated 24.07.2023 and a consequential bank attachment notice dated 26.02.2024.

2. The petitioner is engaged in the business of supply of bricks, blocks, tiles and ceramic goods. The petitioner asserts that he is uneducated and computer illiterate. Therefore, it is further asserted that the petitioner was unaware of proceedings commencing from the issuance of an intimation dated 19.01.2023 and culminating in the impugned assessment order dated 24.07.2023.

3. Learned counsel for the petitioner invited my attention to the impugned assessment order. With reference to defect 1, she pointed out that the assessing officer concluded that no further action is required. As regards defect 2, she pointed out that the petitioner had claimed Input Tax Credit (ITC) of Rs.54,000/- each for SGST and CGST in the GSTR 3B return, whereas the auto-populated GSTR 2A return reflected the availability of ITC to the extent of Rs. 3,23,967/- each towards SGST and CGST. In those circumstances, she submits that the conclusion that the petitioner wrongly availed of eligible ITC is patently wrong and indicates complete non application of mind. As regards the liability to pay interest, she points out that the sum of Rs.3,97,353/- each towards SGST and CGST was remitted on 06.03.2024. In conclusion, learned counsel points out that a sum of Rs.10,86,310/- was appropriated towards the demand under the impugned assessment order from the petitioner’s bank account in the Canara Bank.

4. Mr. V. Prashanth Kiran, learned Government Advocate, accepts notice for the 1^st respondent. He points out that both the intimation and show cause notice were served on the petitioner by post and not merely uploaded on the GST portal. Therefore, he submits that principles of natural justice were clearly complied with.

5. On perusal of the impugned assessment order, it is evident that the petitioner availed of a lower amount as ITC than the amount reflected in the auto-populated GSTR 2A return. In those circumstances, the conclusion that the petitioner wrongly availed of ITC indicates non application of mind. As regards the interest liability for belated filing of returns, the evidence on record reflects that the petitioner remitted sums of Rs.3,97,353/- each towards CGST and SGST on 06.03.2024. In these circumstances, the impugned order calls for interference.

6. Therefore, the impugned assessment order is quashed and the matter is remanded to the assessing officer for reconsideration. The petitioner is permitted to file a reply to the show cause notice dated 24.07.2023 within a period of two weeks from the date of receipt of a copy of this order. Upon receipt thereof, the assessing officer is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh assessment order within a period of two months from the date of receipt of the petitioner’s reply. Since the sum of Rs.10,86,310/- was appropriated from the petitioner’s Canara Bank account, the attachment notice issued to recover the tax demand shall stand raised and the amount appropriated shall abide by the outcome of the remanded proceedings.

7. These writ petitions are disposed of on the above terms. There will be no order as to costs. Consequently, connected miscellaneous petitions are closed.