Sripathi Paper And Boards PVT LTD vs. The Assistant Commissioner (St)

Held

The Court set aside the impugned order dated 15.05.2024. The Court reasoned that the petitioner's submissions, particularly regarding duplication and non-consideration of their reply, indicated potential errors apparent on the face of the record and a gross non-application of mind by the respondent. The Court found merit in the petitioner's illustrations concerning the insurance claim and the calculation of tax liability, which suggested that the demand might have been inflated due to procedural lapses. The Court directed that the impugned order of assessment be treated as a show cause notice. The petitioner was granted six weeks from the date of receipt of the order to submit their objections along with supporting documents. The respondent was directed to consider these objections, pass orders in accordance with law, and afford the petitioner a reasonable opportunity of hearing. The issue of whether the order was arbitrary was not expressly decided but was implicitly addressed by the direction to re-examine the matter.

Facts

The petitioner, M/s. Sripathi Paper and Boards Private Limited, a manufacturer registered under the GST Act, 2017, filed a writ petition challenging an order dated 15.05.2024 passed by the Assistant Commissioner (ST). The challenge was based on alleged errors apparent on the face of the record. An audit of the petitioner's business for the year 2019-2020 was conducted, identifying 45 defects. A show cause notice was issued under Section 74 of the TNGST Act, and the petitioner submitted objections. The impugned order confirmed 26 defects and dropped 19. The petitioner argued that the order contained duplications and failed to consider their replies, citing specific instances related to an insurance claim and tax liability calculations, leading to an inflated demand.

Key Issues

1. Whether the impugned order dated 15.05.2024, passed by the respondent, suffers from an error apparent on the face of the record due to duplication and non-consideration of the petitioner's reply, as contemplated under Section 74 of the TNGST Act? 2. Whether the impugned order is vitiated by arbitrariness and gross non-application of mind by the Assessing Authority? Petitioner's arguments: The petitioner contended that the impugned order suffers from an error apparent on the face of the record. They provided illustrations of duplication and non-consideration of their reply. Specifically, they pointed out that the Input Tax Credit (ITC) reversal was based on an initial insurance claim estimate of Rs. 30.68 crores, instead of the actual received amount of Rs. 16.18 crores. They also highlighted a duplication in calculating tax liability, where a sum of Rs. 4.49 crores was incorrectly added twice along with other amounts, leading to an inflated demand. Furthermore, they argued that a mismatch between GSTR-3B and GSTR-2A was calculated without considering the brought-forward ITC from the previous year. Respondent's arguments: The learned Additional Government Pleader submitted that the assessment would be redone and the petitioner could submit their objections with documentary evidence.