Case Law Details
Golden Mandir Retail Private Limited Vs Assistant Commissioner (ST) (FAC) (Madras High Court)
Introduction: The judgment in Golden Mandir Retail Pvt. Ltd. Vs Asst. Commissioner (ST) (FAC) by the Madras High Court pertains to an assessment order dated 29.12.2023, focusing on Discrepancy Nos.1, 2, 10, and 11. The petitioner, engaged in textiles and Hyundai Motor Vehicles business, contested the imposition of taxes, penalties, and interest based on discrepancies identified in an audit.
Detailed Analysis:
1. Discrepancy No.1 – Non-GST Supplies: The petitioner argued that trade discounts from suppliers were erroneously categorized as non-GST supplies. Despite providing evidence, including financial credit notes, the assessing officer imposed tax, interest, and penalties. The court found the imposition unjustified, directing a reevaluation of the petitioner’s status as a non-GST supplier.
2. Discrepancy No.2 – Mismatch in Returns: While the assessing officer acknowledged no discrepancies in CGST and SGST returns, they alleged a short payment under IGST without prior mention in the show cause notice. The court deemed this irregular and ordered a fresh show cause notice for proper assessment.
3. Discrepancy No.10 – Indirect Income: The petitioner submitted service tax and GSTR-3B returns to justify disclosed indirect income. Despite evidence, the assessing officer claimed no documents were submitted. The court overturned this finding, emphasizing the need for proper consideration of submitted documents.
4. Discrepancy No.11 – Rent for Commercial Purposes: The petitioner clarified tax liabilities concerning rent paid to registered and unregistered persons. However, the assessing officer failed to request relevant documents before concluding non-payment. The court highlighted the necessity of proper verification and granted the petitioner an opportunity to provide additional documents.
Conclusion: The Madras High Court intervened in the assessment order, quashing discrepancies related to Non-GST supplies, mismatched returns, indirect income, and rent payments. The judgment underscores the importance of due process and proper documentation in tax assessments. The assessing officer was directed to reevaluate the issues and provide the petitioner with a fair opportunity to substantiate their claims within specified timelines.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
An assessment order dated 29.12.2023 is assailed as regards the findings relating to Discrepancy Nos.1, 2, 10 and 11. The petitioner states that it carries on business in textiles and also as an authorized dealer of Hyundai Motor Vehicles. Pursuant to an audit, show cause notice dated 25.09.2023 was issued to the petitioner. The petitioner replied thereto on 25.09.2023. The impugned order dated 29.12.2023 came to be issued thereafter.
2. Learned senior counsel for the petitioner submits that the writ petition was filed to assail the impugned order only in respect of Discrepancy Nos.1, 2, 10 and 11. With reference to Discrepancy No.1, which relates to non GST supply, learned senior counsel pointed out that the petitioner had received trade discounts from two suppliers based on performance and that such discounts fall within the scope of non GST supplies. In spite of recognizing that the only error committed by the petitioner was with regard to the column of the return under which reporting was done, it is stated that tax, interest and penalty was imposed. As regards Discrepancy No.2, which relates to alleged mismatch between the GSTR-3B and GSTR-1 returns, learned senior counsel pointed out that the assessing officer accepted that there was no discrepancy between the returns with regard to CGST and SGST. However, he points out that a finding was recorded with regard to alleged short payment of tax under IGST although such issue was not raised in the show cause notice.
3. With regard to Discrepancy No.10, which relates to indirect income, he pointed out that the petitioner had submitted copies of both the service tax returns and GSTR-3B returns to substantiate the assertion that these amounts were duly disclosed. With reference to the findings, he submits that the assessing officer recorded that no documents were submitted. As regards Discrepancy No.11, which relates to rent for commercial purposes, he submits that the taxpayer had pointed out that tax liability with regard to rent paid to unregistered persons was discharged under the RCM method, whereas as regards rent paid to registered persons, it was pointed out that the liability is imposed on the provider of services.
4. Mr.T.N.C.Kaushik, learned Additional Government Pleader, accepts notice for the respondent. He points out that the petitioner should have availed of the statutory remedy in respect of the aspects pointed out by learned senior counsel. He further submits that the tax liability was confirmed in respect of these four discrepancies because the petitioner failed to place relevant documents on record.
5. As regards Discrepancy No.2 relating to alleged mismatch between GSTR-3B and GSTR-1 returns, it is evident that the assessing officer accepted the explanation of the petitioner that there was no mismatch. The finding recorded thereafter that there was short payment of tax under IGST cannot be countenanced on account of the fact that this issue was not raised in the show cause notice pursuant to which the assessment order was issued. As regards this head of liability, it becomes necessary for the assessing officer to issue a fresh show cause notice.
6. Turning to Discrepancy No.1, the petitioner submitted an explanation that trade discount / incentive was received from two suppliers on the basis of performance and that such discount / incentive was in the form of financial credit notes. The assessing officer recorded that relevant documentary evidence such as invoices, ledger copy, agreement and debit notes were not produced. It is further recorded therein that the taxpayer had wrongly reported the claim under exempted category instead of non GST supplies. Tax liability with interest thereon and penalty should not have been imposed in these circumstances and, if necessary, the petitioner should have been called upon to produce additional documents to establish that it is a non GST supply.
7. As regards Discrepancy No.10, which relates to indirect income, it is evident from the reference to the reply in the impugned order that the petitioner had enclosed copies of the service tax return and GSTR-3B returns to substantiate the assertion that the entire indirect income was disclosed. In the face of these documents, the finding that no documentary evidence was submitted is untenable. The last relevant discrepancy relates to payment of rent for commercial purpose. The impugned order records the reply of the taxpayer that tax liability on rental payment to unregistered persons was duly discharged. In light of this submission, the assessing officer should have called for relevant documents before concluding that the petitioner had not discharged tax liability in such regard.
8. For reasons set out above, the impugned assessment order calls for interference insofar as it relates to Discrepancy Nos.1, 2, 10 and 11. To that extent, the impugned order is quashed and the matter is remanded for re-consideration. As regards Discrepancy No.2, it is open to the assessing officer to issue a fresh show cause notice and thereafter proceed in accordance with law. As regards Discrepancy Nos.1, 10 and 11, the petitioner is permitted to submit any additional documents within a maximum 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 maximum period of two months thereafter.
9. W.P.No.4478 of 2024 is disposed of on the above terms. No costs. Consequently, W.M.P.Nos.4830 and 4832 of 2024 are closed.
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