GST update 345 on addition done based on Facebook posts

It is well noticed that the revenue authorities proceed towards invoking of adjudication proceedings on the basis of arbitrary and frivolous grounds without having any concrete evidence in possession. However, this increases the miseries of taxpayers to manifolds. Time and again the revenue authorities are directed by the Court to act judiciously yet they are not wiling to follow those directions. Recently, on similar parameters one case was reported before Kerala High Court in the case of Syamaladasan Kumaran V/s State tax officer. The decision imparted in this case is subject matter of our present update.

The petitioner knocked the doors of Court against the impugned order completing the assessment of Assessment Year 2017-18 wherein it was alleged that the product of the petitioner as a branded item is liable to tax. The counsel of petitioner submitted that the petitioner had not commenced the business of branded rice pertaining to the Financial Year 2017-18. Further, the machinery for dealing in the branded rice was purchased on in 2019. Therefore, the proceedings initiated were on the basis of Facebook post by the son of petitioner in the year 2019 regarding starting of new venture in branded rice. The submissions of the petitioner were not taken into account by the revenue department. Further, even if contentions of revenue department are considered, the same cannot be considered as a reliable material since the adjudication proceedings pertain to Financial Year 2017-18 while the Facebook post was published in the year 2019. Reliance was placed on decision of this court in the case of M/s Ozone Granites (P) Ltd V/s The Intelligence Officer, Commercial Taxes and Others wherein it was delivered that website information cannot be taken into account for initiating adjudication proceedings.

The Counsel of revenue objects the grant stating that alternate remedy was available with the petitioner under Section 107 of the CGST Act, 2017. The order is issued in July and the Writ Petition is highly belated. Further the recovery proceedings have been initiated following the demand raised in account of Ex6 order.

The Court after observing the facts the appeal of the petition stands allowed. It seems that the revenue authorities-initiated adjudication proceedings on the basis of certain Facebook posts which demonstrated that the petitioner was dealing with branded rice. The posts related to same were of Year 2019 and the assessment proceedings were of year prior to that which is not considered by the authorities. Further, the submissions of the petitioner were also not paid attention to. Therefore, the impugned order is quashed and the matter is remanded back to the authorities concerned wherein it was directed to pass an order only after providing an opportunity of being heard to the taxpayers. The fresh order is to be passed within a period of 2 months from date of receipt of certified copy of the Judgement.

The above decision is yet another example of the fact that corrobative and congent evidence should be available with the revenue department to invoke adjudication proceedings against the assessee. Even the authors of this update have also faced the same issue in the era of erstwhile regime of Excise and service tax. It is often discovered that the departmental authorities unnecessary pass adverse orders which is not less than a nightmare for the aggrieved taxpayers. However, a proper practice should be adopted by these authorities regarding searching for proper documents before hand or else there would be never ending litigations on the subject matter like these.

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GST update 345 on addition done based on Facebook posts

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