GST Order Invalid if proper officer failed to determine the tax and relied on the outcome of proceedings in another state.
Summary in Key Points:
- Issue: Whether a tax demand order passed under Section 73 of the GST Act was valid when the proper officer failed to determine the tax and relied on the outcome of proceedings in another state.
- Facts: The assessee had GST registrations in both Maharashtra and Telangana. An order was passed under Section 73 in Telangana, confirming a tax demand subject to communication from the Maharashtra GST authorities, who were conducting separate proceedings. The assessee argued that the Telangana officer was an independent authority and should have determined the tax independently.
- Decision: The High Court held that the impugned order was invalid and remanded the matter for reconsideration.
Analysis:
The High Court ruled in favor of the assessee, setting aside the tax demand order and remanding the matter for fresh adjudication. The court highlighted the following:
- Independent Authority: The Telangana GST officer was an independent authority and not bound by the proceedings in Maharashtra.
- Determination of Tax: The officer failed to determine the tax payable under Section 73(9), rendering the order invalid.
- Procedural Lapse: The procedure adopted by the officer was not in accordance with the law.
Important Note: This case emphasizes the importance of proper procedure and independent determination of tax liability by GST officers. Relying on proceedings in another state without independently assessing the tax liability in the assessee’s own state is a procedural error that can invalidate the entire demand order. This case serves as a reminder to tax authorities to follow due process and ensure that all actions are in accordance with the provisions of the GST Act.
HIGH COURT OF TELANGANA
Procter and Gamble Home Products (P.) Ltd.
v.
Union of India
Sujoy Paul and Dr. G. RADHARANI, JJ.
WRIT PETITION No.35288 of 2024
WPSR No.48232 of 2024
WPSR No.48232 of 2024
DECEMBER 17, 2024
Cuddapah Nanda Gopal, Adv. for the Petitioner. Gadi Praveen Kumar, Dy. Solicitor Gen. of India for the Respondent.
ORDER
Sujoy Paul, J.- Sri Rohan Shah, learned counsel represents Sri C. Nanda Gopal, learned counsel for the petitioner; Sri B. Mukherjee, learned counsel representing Sri Gadi Praveen Kumar, learned Deputy Solicitor General of India, for respondent No.1 and Sri Swaroop Oorilla, learned Special Government Pleader for State Tax, for respondent Nos.2 & 3.
2. With the consent finally heard.
3. This petition filed under Article 226 of the Constitution takes exception to the order dated 31.08.2024 passed under Section 73 of the Central Goods and Services Tax Act, 2017 (for short, CGST Act”).
4. Learned counsel for the petitioner submits that the adjudicating authority was under a statutory obligation under Section 73(9) of the CGST Act to determine the tax. However, in Para No.1 (5), the State Authority opined as under:
“Reply: The objections filed by the TP are examined with reference to the documents submitted in this regard and found that the Hon’ble High court of Bombay remanded the case back to the Maharashtra State GST authorities to give an opportunity. But the orders were not yet finalized by the Maharashtra authorities and in this concern no communication is received from them. Keeping in view the limitation of time for the year 2019-20, the demand of Rs.35,31,59,288.00 is confirmed subject to the communication received from the Maharashtra State GST department.”
5. Learned counsel for the petitioner submits that principle argument of the petitioner is that the procedure adopted by the ‘Proper Officer’ is unknown to law. The petitioner has different registration in the State of Telangana. Thus, the ‘Proper Officer’ of Telangana is an independent statutory authority and was under no obligation to wait for the outcome of the decision taken by the Maharashtra State GST Department. In the absence of determining the tax as per sub Section 9 of Section 73, the impugned order is bad in law and ultra vires Section 73(9) of the CGST Act.
6. Learned Special Government Pleader for State Tax fairly submits that the impugned order, on this ground, may be set aside and the matter may be remitted back to the proper officer to decide it a fresh.
7. Learned counsel for the petitioner raised other arguments also but since we are remanding the matter, it will be left open to the petitioner to raise all possible grounds before the Proper Officer.
8. Resultantly, the impugned order dated 31.08.2024 is set aside and the matter is remanded back with the aforesaid observation.
9. The Writ Petition is disposed of. It is made clear that this Court has not expressed any opinion on the merits of the case. No costs.
Interlocutory applications, if any pending, shall also stand closed.