M/S Jalsa Resorts Thru. Director Rajendra Singh And Another vs. State Of U.P. Tax Deptt. Thru. Prin. Secy. Govt. U.P. Civil Sectt. Lko. And Others

Facts

The petitioner, M/s Jalsa Resorts, challenged an order dated 20.10.2022 passed by the Assistant Commissioner, Grade-2 (Appeal), Lucknow. This appeal was filed against an order dated 11.11.2021 by the Assistant Commissioner, Commercial Tax, Lucknow, which imposed tax, penalty, and interest totaling Rs. 48,90,000/- on the petitioner. The proceedings originated from an inspection by the Special Investigation Branch on 06.12.2017. A notice under Section 74 of the Uttar Pradesh Goods and Services Tax Act, 2017, was issued demanding Rs. 48,96,000/-. The petitioner failed to reply to the show cause notice or provide relevant documents for the period July 2017 to March 2018. Consequently, an ex-parte assessment order was passed, assessing CGST of Rs. 9,00,000/-, SGST of Rs. 9,00,000/-, penalty of Rs. 18,00,000/-, and interest of Rs. 12,96,000/-, totaling Rs. 48,96,000/-.

Held

The Court held that the petitioner's submission that the assessment order was based on presumption lacked merit. The Appellate Authority had meticulously examined all documents submitted by the petitioner and those recovered by the Special Investigation Branch. The Court noted that while the petitioner claimed illness prevented document production during the raid, they failed to produce relevant documents before the Assessing Authority despite receiving a show cause notice. The Appellate Authority found that the petitioner had declared advance receipts of Rs. 3,73,983.05/- in their returns, whereas documents recovered from the resort indicated receipts of Rs. 17,95,000/-. Based on this discrepancy and other entries in a recovered diary, the Appellate Authority reduced the total liability to Rs. 10,39,320/- (CGST Rs. 1,80,000/-, SGST Rs. 1,80,000/-, penalty Rs. 3,60,000/-, interest Rs. 3,19,320/-), a reduction of Rs. 38,56,680/- from the original assessment. The Court found no error in the impugned order passed by the Appellate Authority.

Key Issues

1. Whether the assessment order dated 11.11.2021, passed ex-parte by the Assessing Authority, was based on presumption and lacked proper examination of documents, thereby violating principles of natural justice, as argued by the petitioner? 2. Whether the Appellate Authority erred in upholding the revised tax liability, penalty, and interest, considering the petitioner's submission that the turnover was incorrectly assessed and that the recovered documents did not support the revenue's claim? Petitioner's Arguments: The petitioner contended that the assessment order was based on presumption and that relevant documents could not be produced during the raid due to the petitioner's hospitalization. They argued that the turnover was incorrectly assessed at Rs. 1,00,00,000/-. The petitioner also submitted that they had declared a taxable amount of Rs. 43,75,059.46/- for the financial year 2017-18 (July 2017 to March 2018) and paid Rs. 3,70,229/- each for CGST and SGST. Respondent's Arguments: The State argued that the petitioner failed to respond to the show cause notice and did not produce relevant documents before the Assessing Authority. The Appellate Authority examined the documents recovered by the Special Investigation Branch, including a diary and loose papers, and found discrepancies between the declared advance receipts and the amounts noted in the diary, suggesting higher receipts than declared.