GST Demand Order stayed pending clarification on the taxable value of supplies.
Summary in Key Points:
- Issue: Whether a show cause notice (SCN) issued under Section 73 of the GST Act is valid when it contains errors in the quoted provision and fails to address the assessee’s explanation regarding the disputed Input Tax Credit (ITC) amount.
- Facts: The assessee received an SCN alleging that they needed to reverse a certain ITC amount. The assessee pointed out that the SCN contained an error in the quoted provision (Section 16(2)) and provided an explanation for the ITC amount, stating that it included both exempted and taxable supplies.
- Stay of Order: The impugned order was stayed until the next hearing, allowing the assessee time to respond and the authorities to examine the issue further.
Decision:
The High Court ruled partially in favor of the assessee, setting aside the impugned order and providing the following directions:
- Typographical Errors: The court acknowledged the typographical errors in the SCN and the impugned order regarding the quoted provision.
- Consideration of Explanation: The court directed the authorities to consider the assessee’s explanation regarding the ITC amount and verify their claims regarding the exempted and taxable supplies.
- Opportunity to Respond: The assessee was given an opportunity to respond to the SCN and provide further clarification on the disputed ITC.
- Stay of Order: The impugned order was stayed until the next hearing, allowing the assessee time to respond and the authorities to examine the issue further.
Important Note: This case highlights the importance of accuracy and clarity in GST notices and orders. The High Court’s decision emphasizes that errors in quoting provisions and failure to consider the assessee’s explanations can render the demand unsustainable. This decision ensures that taxpayers are given a fair opportunity to respond to accurate and properly framed demands, promoting fairness and transparency in GST proceedings.
HIGH COURT OF ORISSA
Coastal Construction
v.
Chief Commissioner of CT and GST
Arindam Sinha and M.S. Sahoo, JJ.
W.P.(C) No.31658 of 2024
JANUARY 3, 2025
R.P. Kar, Sr. Adv. for the Petitioner. S. Mishra, Standing Counsel for the Respondent.
ORDER
W.P.(C) no.31658 of2024 and I.A. no.16971 of 2024
1. Mr. Kar, learned senior advocate appears on behalf of petitioner and submits, his client has challenged, inter alia, show cause notice dated 8th August, 2023 issued under section 73 of Odisha Goods and Services Tax Act, 2017 in respect of tax period 2017-18 (1st July, 2017 to 31st March, 2018). He demonstrates from quote of provision in section 16(2) in the notice that there is error. Two provisos follow clause (d) but the authority has added clause (e) and relied upon it to allege, Input Tax Credit (ITC) amount ?37,02,723/- i.e. 18% of Rs.2,05,70,686/- (sundry creditors) needs to be reversed with interest. He submits, the errors are apparent. The show cause notice (SCN) culminated in also impugned order dated 12th December, 2023. Impugned order be set aside and quashed for his client to have further opportunity of hearing in the restored adjudication.
2. The SCN does say ITC amounting to Rs.37,02,723/- needs to be reversed with interest and the allegations stand confirmed by impugned order. Prima facie, it appears that the authority has attributed ITC to petitioner (dealer). On query made Mr. Kar submits, the figure has been taken from his client’s balance sheet. He points out, his client had given explanation that a part of it related to exempted supply of goods (diesel), most part on exempted of supply of services (received from unregistered suppliers) and balance amount of Rs.30,38,928/- is the taxable supplies received.
3. We have before us two figures. They are, allegation by revenue that ITC amounting to Rs.37,02,723/- was wrongfully availed. We have explanation of petitioner that balance amount of Rs.30,38,928/- is the taxable supplies received. That leaves a difference of Rs.6,63,795/-.
4. Mr. Mishra, learned advocate, Standing Counsel appears on behalf of revenue. He submits, no interference is warranted with impugned order. Sundry creditor amount of Rs.2,05,70,686/- was not reversed within 180 days, which is why 18% of it was noticed to be demand of tax with interest thereon. Accordingly there was adjudication. Furthermore, the order is appealable. Petitioner has lost its right of appeal and therefore the petition, which is not maintainable.
5. We are satisfied that inserting clause (e) in the provision reproduced in the SCN and impugned order are typographical errors. The two provisos are clearly there. However, we need satisfaction that there was finding, of petitioner having had claimed and availed the ITC. Revenue to issue instructions.
6. List on 21st January, 2025. Impugned order will remain stayed till next date of hearing.