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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 327 on grant of personal hearing even if not requested

GST Update No 327 on grant of personal hearing even if not requested
It is well established that before passing any adverse order against the assessee or before initiating any adjudicating proceedings, a proper and valid show cause notice and an opportunity of hearing must be served on the assessee. Although it is well known that opportunity of hearing is a vested right of the taxpayer, yet it is often observed that revenue authorities are reluctant to grant opportunity of hearing and pass the demand orders. The High Courts have to step down to provide relief to aggrieved taxpayers. Recently, one such case of same subject matter was reported before Gujarat High Court in the case of M/S GRAZIANO TRASMISSIONI INDIA PRIVATE LIMITED VS STATE OF GUJARAT. The decision imparted in this case is subject matter of discussion of our present update. The petitioner filed this petition under Article 226 of Constitution of India. It was submitted that there is gross violation of principles of natural justice. The petitioner is a unit manufacturing automobile component. The goods were exported by the petitioner outside India under LUT and without payment of GST. The returns in FORM GSTR-1, 3B and 9 were filed. It was alleged that in GSTR-1 and 9, the petitioner correctly disclosed the export turnover in the column of zero-rated supply. However, in GSTR-3B filed by petitioner for September, 17 inadvertently the value of exports were reported in exempt/NIL rated supply and not in zero rated supply. Consequently, the GST liability along with interest and penalty was intimated in DRC-01A along with the requirement of reversal as per Rule 42 and 43 of CGST Rules, 2017.The petitioner responded on 27.07.2021 to the intimation received related to scrutiny of returns. The reply was furnished on 26.08.2021 wherein explanation was provided clarifying that the amount did not pertain to exempted, NIL rated and non-taxable supply. It was submitted that this happened because of the fact that GST was introduced in 2017. The petitioner further argued that a show cause notice was issued wherein demand along with interest and penalty was proposed. The reply was filed as on 26.02.2022 along with annexures. On 25.03.2022, an order was passed by respondent and no opportunity of hearing was awarded to the aggrieved taxpayer.

The Counsel of Department argued that the online portal was chosen by petitioner and hence, the entire proceedings are proceeded in online manner. The opportunity of hearing is not granted since the same is not requested by the petitioner. The Court heard the case and referred to the provisions of Section 75 of CGST Act, 2017 wherein it is stated that an opportunity of hearing is to be provided where a request is received in writing or where any adverse decision is taken against such person. The revenue authorities failed to refer to the provisions of Section 75. Even if no request is made by party, an opportunity of personal hearing is to be granted in case of adverse decision. Since the same is missing in the present case, the case is remanded back directing the respondent to pass the order afresh by considering the submissions of the petitioner after providing opportunity of hearing to them.

The above decision is a favourable decision wherein it is delivered that proper opportunity of hearing must be provided to the assessee otherwise it amounts to violation of principles of natural justice. It is high time that revenue authorities should understand this basic principle otherwise the litigations will never reach to a conclusive end.
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