GST Assessment Set Aside as there is no statutory sanction for calculating tax liability based on 40% of the total turnover and Remanded for Fresh Consideration
Summary in Key Points:
- Issue: Whether a GST assessment is valid when the Assessing Officer (AO) calculates the tax liability based on 40% of the assessee’s total turnover, even though the assessee specifically declared their gross turnover within the state.
- Facts: The assessee, operating in 19 states, filed their annual return for transactions in the state of Bihar. The AO, however, considered the assessee’s entire turnover across all states and applied 40% of that total turnover to the state of Bihar for the assessment. The assessee challenged this calculation, stating that their gross turnover within Bihar was specifically declared in their return.
- Decision: The High Court set aside the assessment order and the order passed on the rectification application, holding that there was no statutory sanction for calculating tax liability based on 40% of the total turnover. The matter was remanded to the AO for fresh assessment.
ANALYSIS:
The High Court ruled in favor of the assessee, setting aside the assessment order and the order passed on the rectification application. The court emphasized the following:
- Lack of Statutory Sanction: The assessment order did not provide any legal basis or statutory provision for calculating the tax liability based on 40% of the total turnover.
- Specific Declaration of Turnover: The assessee had specifically declared their gross turnover within the state of Bihar in their annual return.
- Remand for Fresh Assessment: The court remanded the matter back to the AO for fresh assessment, directing the AO to consider the assessee’s declared gross turnover within Bihar and calculate the tax liability accordingly.
Important Note: This case highlights the importance of adhering to statutory provisions and considering the information provided by the assessee in GST assessments. The AO cannot arbitrarily apply a percentage of the total turnover without any legal basis, especially when the assessee has specifically declared their turnover within the state. This decision ensures that assessments are conducted in accordance with the law and that taxpayers are not subjected to arbitrary tax calculations.
HIGH COURT OF PATNA
Run Service Infocare (P.) Ltd.
v.
Union of India
K. Vinod Chandran, CJ.
and Nani Tagia, J.
and Nani Tagia, J.
Civil Writ Jurisdiction Case No.18052 of 2024
DECEMBER 4, 2024
Anurag Saurav, Ms. Sharda Raje Singh, Ankesh Bidhu, Abhishek Kumar and Ms. Prity Kumari, Advs. for the Petitioner.
JUDGMENT
K. Vinod Chandran, CJ.- The petitioner is aggrieved with Annexure P-10 order rejecting his rectification application. Admittedly, an assessment was carried out against the petitioner for the Assessment Year 2019-20 as per Annexure P7 order.
2. The petitioner’s contention is that the petitioner is an entity having its activities spread over 19 States in the country and has transactions in all the other States too. The annual return with respect to the transactions in the State of Bihar was filed before the Assessing Officer. The Assessing Officer is said to have reckoned the entire turnover of the petitioner, even those outside the State of Bihar, for the purpose of assessment and 40% of the total turnover is taken for the State of Bihar.
3. The petitioner’s specific contention is that there can be no computation of 40% of the actual turnover, since his gross turnover within the State of Bihar has been specifically shown in the annual return.
4. The learned Government Advocate argues from Assessing Officer’s report that the Assessing Officer, in the rectification application, had called for the documents relating to the turnover in Tamil Nadu, which has been taxed in the said State. It is also noticed in the order now impugned, produced as Annexure P-10 that the taxpayer did not provide copies of GSTR-9, GSTIN, Debit Notes, Trial Balance or Books of Account relating to the States, other than Bihar in support of their claim. In fact without such documents, there could have been no rectification done.
5. It is the contention of the Government Advocate that the petitioner had produced the documents only after the order was passed under section 73(10) of the Bihar Goods and Services Tax Act, 2017. The learned Government Advocate also points out that the order of assessment was passed on 20.08.2024 and the documents were produced only along with the rectification application. Rectification application is only for correction of apparent errors on the face of the record, which was not the contention raised by the petitioner.
6. We have looked at the order dated 20.08.2024 and find no statutory sanction for an assessment made of the 40% of the total turnover, which is taken as the taxable transaction within the State of Bihar. In that circumstance, we find absolutely no reason to sustain the order dated 20.08.2024 itself. On the above finding, we set aside the order of assessment (Annexure P/6) and order of rectification (Annexure- P/10). We direct the petitioner to appear before the Assessing Officer with all substantiating documents on 20th of December 2024. The Assessing Officer on the same date or on an adjourned date, the acknowledgment of which will be taken from the assessee or the authorized representative who appears on the 20th of December 2024, afford opportunity for hearing and finalize the assessment.
7. The writ petition stands disposed of.