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Corporate News *  Service tax penalty can’t survive when assessee acted on dept.’s own view of non-taxability: Delhi High Court. *  GST section 74 extended limitation questionable when form 26AS mismatch was already known: Karnataka High Court grants interim relief. *  CGST demand prima facie impermissible after state GST settlement under section 128A: Bombay High Court. *  Supreme Court asks GSTAT to sympathetically consider delay as taxpayers pursued remedy before wrong forum. *  Supreme Court stays Tripura High Court ruling protecting genuine buyers from ITC denial over supplier’s GST default. *  Diary entries alone can’t prove clandestine removal of goods: CESTAT quashes excise penalty on steel trader. *  Customs could investigate preferential tariff claims even before sec. 28DA: Delhi High Court. *  Customs dept. relied on fake AI generated case laws: supreme court quashes Rs. 425.28 crore penalty. *  No GST exemption in affiliation and annual registration charges for admission or conduct Of examinations: GSTAT. *  Mere invoices, cheque payments insufficient to establish genuine movement of goods: GSTAT restores Rs. 43.44 lakh ITC demand. *  Consolidated GST show cause notice covering multiple financial years is not without jurisdiction: Delhi High Court. *  Construction of independent houses on separate plots not taxable as ‘Residential Complex’ without common facilities: CESTAT. *  GST penalty exceeding statutory maximum unsustainable; Allahabad High Court quashes ? 50,000/- penalty after taxpayer filed return and paid late fee. *  GST order against standard chartered bank passed without hearing set aside by Bombay High Court. *  Retracted statements can’t be relied upon without cross-examination: CESTAT quashes gold confiscation. *  Burden to prove misclassification lies on customs department: CESTAT. *  CESTAT quashes Rs. 98 lakh excise demand on clearance of used refractory brick scrap. *  Service tax demand on irrigation works quashed: Karnataka High Court rules sale of goods component not taxable as service. *  GSTAT restores tax and penalty for transporting iron scrap without E-way bill citing intent to evade tax. *  Madras High Court stays GST recovery from directors without opportunity to show cause under section 89. *  Madras high court stays GST recovery notice against directors; finds prima facie case on applicability of section 79(1)(c). *  Procedural lapses can’t justify harsh punishment without serious customs breach: CESTAT quashes customs broker licence revocation. *  Service tax payable on land leasing and sports complex charges: CESTAT. *  Settled customs dispute can’t be reopened through Article 226 challenge to interest liability: Delhi High Court. *  Mere facilitation of customs clearance can’t establish knowledge of smuggling: Madras High Court. *  GST registration cancellation stayed: Allahabad High Court questions 99% ITC utilisation cap under rule 86B. *  Composition scheme lapses automatically on crossing Rs. 1.5 crore turnover: GSTAT. *  Gujarat High Court quashes GST cancellation orders after officer relied on non-existent AI-generated case laws. *  Importers liable for customs duty benefits availed through manipulated scrips: Delhi High Court. *  Procedural E-way bill lapse alone can’t justify penalty where genuine transaction and absence of tax evasion are established: GSTAT.
Subject News *  Documentary evidence dominates probe, further custody unwarranted: mumbai court grants bail in Rs. 22.44 crore customs duty evasion case. *  Business premises can’t remain sealed for non-participation in GST search: Allahabad High Court. *  GST pre-deposit must be refunded proportionately when taxpayer partly succeeds in appeal: Bombay High Court. *  Supreme Court grants 30 days to file GST appeal; keeps pre-deposit issue open due to deposit in parallel CGST proceedings. *  GST demand can’t exceed amount proposed in SCN: Allahabad High Court quashes Rs. 20.47 Crore order. *  Hundreds-of-crores GST demand and heavy 10% pre-deposit no ground to bypass statutory appeal: Punjab & Haryana High Court. *  Delhi High Court refuses to entertain challenge to gold confiscation due to statutory appeal remedy and unexplained delay. *  Procedural error in customs broker licence inquiry can be rectified through remand: Delhi High Court. *  GSTR-2A mismatch alone can’t justify ITC denial without invoice-wise verification; personal hearing mandatory: GSTAT. *  GST order passed without uploading personal hearing notices violates sec. 75(4): Allahabad High Court. *  TAX EVASION - Sec. 74 GST SCN quashed for not spelling out fraud, wilful misstatement or suppression: Allahabad High Court. *  STPI’s SOFTEX certification and NoC charges taxable as business support services: CESTAT. *  Suspicion can’t replace proof: CESTAT quashes penalty in alleged gold-smuggling operation. *   Limitation runs from communication of order: Madras High Court upholds rejection of delayed GST Appeals. *  Rajasthan High Court quashes GST demand over unsigned show cause notice. *  ITC recovery upheld where supplier failed to deposit GST: Rajasthan High Court. *  Customs commissioner’s empowered to make port trust liable for duty on pilfered goods: Supreme Court. *  Rectification proceedings can’t be used to challenge an uncontested GST assessment through a writ petition: Andhra Pradesh HC. *  GST proceedings against deceased proprietor unsustainable without notice to legal heir: GSTAT. *  Mere availment of ineligible self-assessed ITC doesn’t amount to suppression without evidence of fraud or wilful misstatement: GSTAT. *  Disposal of mining overburden by entity authorised by mining lease holder constitutes taxable service: CESTAT. *  Toll plaza data not mandatory for ITC refund: GSTAT. *  Disputed GST fraud allegations require investigation: Punjab and Haryana High Court makes interim bail absolute in alleged fraud and GST fraud case. *  Non-manufacturer contractor liable to deposit excess excise duty collected from buyer: CESTAT. *  GST order can’t reject taxpayer’s reply as “not satisfactory” without reasons: Madhya Pradesh High Court. *  Uncorroborated statements can’t establish alleged diversion of duty-free goods: CESTAT. *  Erection services were not liable to service tax prior to 10th september 2004: CESTAT. *  Sec. 74 GST notice must spell out statutory ingredients for invoking extended tax demand proceedings: Allahabad High Court. *  No jurisdictional bar under section 6(2)(b) in parallel CGST SGST proceedings: Delhi High Court refuses to bypass GST appeal remedy. *  Madras High Court remits GST demand for fresh adjudication after taxpayer claims it was unaware of SCN following business closure.  

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GST update No 275 on quashing of assessment order since no hearing was granted

GST update No 275 on quashing of assessment order since no hearing was granted
The revenue authorities often fail to provide sufficient opportunity to the assessee thereby violating the principles of natural justice resulting into quashing of proceedings. The Court is flooded with number of cases wherein the importance of providing opportunity of hearing is explained. Once again, one more case on the same issue was reported before Madras High Court in the case of M/S ANANTHAM SILKS. The decision delivered in this case is the subject matter of discussion of our present update.The petitioner is engaged in trading of textiles and garments and having showrooms in other places as well. The partnership firm of the assessee was dissolved and a private limited company was formed which continued with the same trading activities. An inspection under Section 67 of CGST Act, 2017 was conducted in the three showrooms wherein the team pointed out at theirregularities in the transactions undertaken and revision of assessment was made based on the inspection report. Based on this, show cause notice was issued demanding explanation of the issue along with documentary evidence. It was submitted that communication was issued by the departmental officers in DRC-01A for the FY from 2017-18 to 2020-21 alleging the defects in tax liabilities and nonmaintenance of accounts. The petitioner requested time period of 30 days to submit the response vide letter dated 22.12.2021. The respondent directed the petitioner to appear for personal hearing vide letter dated 28.12.2021. The petitioner vide letter dated 03.1.2022 replied in Part-B of DRC-01A stating that the tax demanded is not correct on facts and law. Further, it was submitted tFurther, it was submitted that inspection and investigation was conducted by different officers in wrong manner which resulted into misunderstanding of facts and misinterpretation of provisions and notifications. It was argued that proceedings were carried out in completely perverse manner in complete violation of principles of natural justice. Therefore, DRC-01A should be rejected. The respondent without taking into consideration the seriousness of the objections of the petitioner intimated vide letter dated 11.01.2022 that final opportunity of hearing is to be provided and directed the assessee to appear for the same as on 24.01.2022. The authorised representative appeared and explained that personal hearing cannot be initiated at the stage of adjudicating proceedings and reiterated the submissions of the petitioner. It was contended that the order passed is in violation of principles of natural justice. It was submitted that no show cause notice was served before passing the order. It was further submitted that filing of appeal against the order would tantamount to acceptance of legality of the order. The appeal is preferred within the time limit as prescribed by the Law and the Suo moto extension of limitation by the Apex Court.142(1A) of CGST Rules, 2017. It was contended that the respondent vide DRC-09 directed the Branch Manager to recover the amount due from the petitioner consequent to the impugned order. The order passed is in gross violation of principles of natural justice and not following the procedures as prescribed under the Law. In this regard, reference was drawn to following circulars and rulings:• CIRCULAR NO. 10/2019 DATED 31.05.2019 • CIRCULAR NO. 72/2019 DATED 31.05.2019 • MAHINDRA AND MAHINDRA LTD. V/S JOINT COMMISSIONER (CT) APPEALS • MAHINDRA AND MAHINDRA LTD. V/S THE DEPUTY COMMISSIONER (CT)-II • M/S NKAS SERVICES PRIVATE LIMITED, KOLKATA V/S THE STATE OF JHARKHAND AND OTHERS • M/S V.R.S. TRADERS V/S ASSISTANT COMMISSIONER (STATE TAXES) • AGROMETAL VENDIBLES PVT. LTD. V/S STATE OF GUJARATThe respondent submitted that petitioner did not raise any objection to the inspection carried out and also agreed to the defects pointed out during the investigation and paid Rs. 89,52,450/-. Hence, the objections are not acceptable. Further it was argued that the burden of proof lies on the dealer wherein the adjudicating authority is to be satisfied that there is no evasion of tax on his end. Therefore it was argued that notice is issued and properly served in accordance with the provisions of the Act. It was further argued that the objections made by the appellant were not convincing and acceptable.The Court observed that the authorised representative of the assessee failed to provide proper explanation along with supporting documents. It was further observed that after issuance of notice in DRC-01A dated 06.12.2021, respondent issued DRC-01A. Thereafter, a show cause notice under Section 74 of CGST Act 2017 and then assessment order is to be issued. However, the said procedure was not followed and respondent issued a communication in DRC-09 directing the branch manager to recover the amount due from the petitioner under Section 79 of the CGST Act, 2017. Therefore, assessment orderswere quashed and recovery notice issued to the bank was also quashed. The respondent directed to issue notice after following procedures prescribed in accordance with law. The above decision is yet another epitome supporting the fact that proper adjudication process which is duly prescribed under law should be followed. There had been plethora of cases wherein Court delivered the decisions in favour of the assessees when there has been violation of the principles of natural justice. To illustrate, Andhra Pradesh High Court in the case of SREE CONSTRUCTIONS V/S THE ASSISTANT COMMISSIONER (ST) held that opportunity of hearing must be provided before imposing any tax/penalty of taking adverse decision. Judicial Pronouncements like these should be followed unconditionally by the lower authorities before initiating any action for recovery of demand against the taxpayers.
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