M/S Suraj Agency vs. The Union Of INDIA

Held

The Court held that the impugned orders were neither suffering from a violation of the principles of natural justice nor did it find any jurisdictional error committed by the respondent authorities. Regarding the first issue, the Court noted that the respondents contended that the petitioner did not respond to the show-cause notice, leading to an ex-parte assessment. While the petitioner claimed clerical errors, the appellate authority found that the petitioner did not produce concrete evidence like a sale register or audit report to substantiate their claims regarding turnover discrepancies. Concerning the second issue, the appellate authority found that the petitioner had availed ITC in excess of GSTR-2A and did not produce evidence to support the difference. The appellate authority also referred to Circular No. 183 dated February 27, 2022, and Section 16(2) of the CGST/BGST Act. The Court found that the petitioner did not deny the statements in the counter-affidavit regarding the admission of claiming ITC in excess of GSTR-2A. Therefore, the scope of interference in extraordinary writ jurisdiction was not extended to entertain the writ application.

Facts

The petitioner, M/s Suraj Agency, filed a writ petition challenging an ex-parte assessment order dated December 6, 2023, passed by the Assistant Commissioner of State Taxes (Respondent No. 6) for the Financial Year 2018-19. This order imposed a total liability of Rs. 44,42,848/- (Tax: Rs. 22,89,337/-, Interest: Rs. 19,24,959/-, Penalty: Rs. 2,28,552/-). The petitioner also challenged the consequential demand notice in Form DRC-07 and an appellate order dated September 13, 2024, passed by the Additional Commissioner of State Taxes (Appeals) (Respondent No. 5), which rejected the petitioner's appeal. The petitioner contended that the assessment was made without considering their submissions and that clerical errors in returns led to discrepancies in turnover declarations. The respondents argued that the petitioner suppressed turnover and claimed excess Input Tax Credit (ITC) after failing to respond to a show-cause notice.

Key Issues

1. Whether the ex-parte assessment order dated December 6, 2023, passed by Respondent No. 6 for FY 2018-19 is vitiated by a violation of the principles of natural justice and/or jurisdictional error, considering the petitioner's claim of clerical errors in returns and submission of GSTR-9? (Petitioner's contention: Yes, the order was passed without considering the petitioner's stand and GSTR-9, which corrected turnover discrepancies due to clerical errors. Revenue's contention: No, the petitioner failed to respond to the show-cause notice, leading to an ex-parte assessment based on detected discrepancies in turnover and ITC claims. 2. Whether the appellate order dated September 13, 2024, passed by Respondent No. 5, is sustainable in law, given the petitioner's arguments regarding the appellate authority's failure to consider turnover reconciliation and the validity of ITC claims based on Section 16(2) of the CGST/BGST Act? (Petitioner's contention: No, the appellate authority failed to appreciate the turnover reconciliation and material on record. Revenue's contention: Yes, the appellate authority comprehensively dealt with the petitioner's submissions, including the admission of excess ITC claims, and the constitutional validity of Section 16(2) has been upheld.)