Snekha Agency vs. The Appellate Deputy Commissioner (GST)

By the impugned order, the assessment was made ex parte because the petitioner did not utilise the opportunities provided. The discrepancies and grounds on which the assessment order was issued, the dealer’s explanation on merits, and the reasons for not participating in the assessment proceedings are summarised briefly and presented in a table below: 3 https://www.mhc.tn.gov.in/judis Discrepancies found/Grounds on which the order is passed Explanation offered by the Assessee on merits Explanation for not availing the opportunity Defect No.1 On verification of ITC between in the auto populated Form GSTR 2A and ITC claimed as per GSTR 3B, the taxable person has claimed excess ITC for the years from 2018-2019. The taxable person stated that they have not claimed ineligible ITC for the above and there is no purchase omission. Defect No.2 On further verification of return in Form GSTR 2A from 2018-19 it was noticed that they have claimed ITC which is restricted (Blocked Credit) from availment. The taxable person stated that the above claim of ITC are related to their business inward supplies of biscuits, beverages etc., and produced copies of sample purchase invoices. Hence, there is no liable to pay tax. Defect No.3 On verification of GSTR 2A returns for the period 2018-19 it was noticed that e.way bills were not generated for the inward supplies exceeding Rs.1,00,000/-. The taxable person suppliers have not stated that the inward generated e.way bills and hence they are not liable to pay tax for the above purchases. Defect No.4 On scrutiny of GSTR 2A returns for the period 2018-2019 to it was noticed that the e.way bills generated for the inward supplies were not reported in the return GSTR 2A. The taxable person produced the details for the above inward supplies reported in GST login GSTR 2A. Hence, there is no liable to pay tax. But for inspection the aforesaid defects would not have come to light. The liabilities arises on account of the defects noticed would be a loss to revenue unless unearthed at the time of inspection. Hence, it is proposed to recover the tax amount pointed out in the above defects along with interest and penalty under section 74 of the TNGST ACT, 2017. The GST department passed an order against dated 15.10.2024 order to pay an amount of tax value CGST 24 me in an amount of Rs. 0/- and SGST an amount of Rs. 55,030.00/- and total of CGST and SGST amount of an Rs. 55,030.00/- and levied interest in CGST an amount of Rs. 37,668.00/- and in SGST an amount of Rs. 37,668.00/- and total of CGST and SGST an interest amount of Rs. 75,336.00/- and levied penalty in CGST amount of an Rs. 55,030.00/- and in SGST an amount of Rs. 55,030.00/- and total of CGST and SGST an penalty amount of Rs. of 1,10,060.00/- and Fee in CGST an amount Rs.00/- and Fee in SGST an amount of Rs. 00/- and total of CGST and SGST an Fee amount of Rs.00/- and others in CGST an amount of Rs. 0.00 and in SGST an amount of Rs. 0.00 and total of CGST and SGST an others amount of Rs. 0.00/- and totaling of CGST and SGST an amount of Rs. 2,40,426.00/- for the discrepancies found in the Tax period 2018-2019. The petitioner, Tvl. Snekha Agency, a registered dealer under the TNGST Act, 2017 bearing GSTIN No. 33AWHPM7660H1ZC, was subjected to a surprise inspection by the Intelligence Wing officials on 23.01.2023 and 24.01.2023, pursuant to which a Show Cause Notice in Form GST DRC-01 dated 18.06.2024 was issued alleging excess availment of Input Tax Credit for the assessment year 2018-19 based on mismatch between GSTR-2A and GSTR-3B returns. Despite the petitioner having maintained that all purchases were genuine, supported by valid tax invoices and duly accounted in the respondents, conducting books of accounts, the independent verification without any with the suppliers or establishing any fraud, suppression, bogus purchases or wrongful availment of credit, passed the impugned order dated 15.10.2024 under Section 74 of the TNGST Act, 2017 and issued consequential DRC-07 demand notice confirming a total demand of ?2,40,426/-towards tax, interest and penalty. Aggrieved by the arbitrary and non-speaking order passed solely on the basis of GSTR-2A/GSTR-3B mismatch in violation of the principles of natural justice and settled legal principles governing Input Tax Credit, the petitioner has filed the present Writ Petition seeking to quash the impugned proceedings. The petitioner is unaware of all this GST departmental proceedings and the is communication entirely through online mode in GST portal and the petitioner don't have any knowledge about those proceedings and these short-paid tax and output mismatch were not done purposefully and it happened erroneously in the year of 2018-2019 as the GST portal is new to each and every tax payer. Being a regular tax payer, the petitioner did not evade tax purposefully and now the GST department have imposed a huge levy amount against the petitioner which the petitioner can't pay and this is a huge amount imposed against the petitioner which completely affect his entire business. 4 https://www.mhc.tn.gov.in/judis

Considering the nature of the discrepancies noted, the explanation provided by the assessee and the reason given before this Court for not availing the opportunity, I believe that an opportunity can be granted to the assessee to present their submissions and produce the relevant supporting documents before the respondent assessing officer. This Court has been extending such opportunities on equitable grounds; however, under appropriate conditions. Therefore, an opportunity is granted to the petitioner assessee on the condition of depositing 25% of the disputed tax amount.

In view of this, the writ petition is allowed on the following terms:- i. Within four weeks of receiving the web copy of the order, the petitioner shall deposit 25% of the disputed tax amount with the respondent, without waiting for a certified copy of the order. ii. Upon such deposit, the impugned orders dated 15.10.2024 shall stand set aside, and the matter shall stand remanded back to the file of the respondent. 5 https://www.mhc.tn.gov.in/judis iii. The assessee shall appear before the respondent without fail and submit their reply and documents in support of their claim, and it is for the respondent to consider the matter afresh and pass orders in accordance with law. iv. Since the impugned order of assessment is set aside, any attachment of the bank account made pursuant to the impugned order shall stand raised. v. No costs. Consequently the connected miscellaneous petitions shall stand closed. 24.06.2026 NCC:Yes/No rgm 6 https://www.mhc.tn.gov.in/judis To 1. The Appellate Deputy Commissioner (GST), 4th floor, Commercial Taxes Buildings, Dr. S.V.K.S. Thangaraj Salai, Madurai -625020. Camp office at 1st Floor, Commercial Taxes Buildings, South High Ground Road, Palayamkottai, Tirunelveli -627002. 2. The State Tax Officer (ST) - II (Inspection), Office of the Joint Commissioner (ST) (IW), Office at 1st Floor, Commercial Taxes Buildings, South High Ground Road, Palayamkottai, Tirunelveli -627002. 7 https://www.mhc.tn.gov.in/judis D.BHARATHA CHAKRAVARTHY