GST TDS Mismatch: Rejection of PMT-09 and Demand Order Set Aside for Lack of Proper Opportunity to Assessee.

GST TDS Mismatch: Rejection of PMT-09 and Demand Order Set Aside for Lack of Proper Opportunity to Assessee.

Issue:

Whether the rejection of an assessee’s request (via PMT-09) to transfer TDS deposited under an old GSTIN to a new GST registration and the subsequent demand order are valid when the assessee, having undergone CIRP, claims the TDS was inadvertently deposited incorrectly by clients, and the assessee was not granted a sufficient opportunity to reconcile the discrepancy.

Facts:

• The assessee, Ebixcash Mobility Software India Ltd., had undergone Corporate Insolvency Resolution Process (CIRP) and obtained a new GST registration.
• The assessee claimed entitlement to certain TDS amounts, which were to be deposited by clients (such as BSNL and NIC) under the new registration.
• Inadvertently, these clients deposited the TDS amounts with the old GSTIN of the assessee.
• The assessee filed Form PMT-09 to transfer the erroneously deposited TDS and the remaining cash ledger balance to its new GST registration.
• The respondent rejected the PMT-09 application and issued a Show Cause Notice (SCN).
• The assessee’s explanation was not accepted, and a demand was raised.
• The authorities submitted that a personal hearing was afforded but not availed, and reminder notices seeking documents (invoices, supplier certificates) were issued but not supplied.

Decision:

The High Court set aside the impugned order and remanded the matter. The assessee was to be granted an opportunity to present its case before the Adjudicating Authority to reconcile the TDS deposited by clients in the wrong GSTIN.

Key Takeaways:

• Even if a personal hearing is initially not availed by the assessee, and requested documents are not immediately provided, if the core issue involves a reconciliation of a genuine mistake (like TDS being deposited under an incorrect GSTIN due to a new registration post-CIRP), the Adjudicating Authority should provide a fair and adequate opportunity to the assessee to present their case and relevant documents.
• The principles of natural justice require that an assessee should have a proper chance to explain discrepancies, especially when dealing with technical issues like fund transfers between GSTINs via PMT-09, which are designed to facilitate such corrections.
• The court recognized that the matter was essentially a “question of reconciliation” of TDS, implying that a proper opportunity for the assessee to provide evidence and clarify the situation was crucial before a final demand order could be sustained.
• The decision underscores the importance of affording a meaningful opportunity of hearing, particularly in complex situations arising from corporate restructuring like CIRP and subsequent GST registration changes.