In a recent judgement, the Delhi High Court has set aside the Integrated Goods and Service Tax (IGST) demand of ₹163, 91, 65,902/- due to the failure to address discrepancies in Malaysia Airlines’ GST returns and bank credits.
The petitioner has filed the present petition, inter alia, impugning the order dated 27.04.2024 and the consequent demand notices issued by respondent no.2. The impugned order was passed under Section 73 of the Central Goods and Services Tax Act, 2017 (CGST Act) in respect of the tax period from April, 2018 to March, 2019.
The impugned order was passed pursuant to the Show Cause Notice dated 30.01.2024 based on a Special Audit Report. The SCN is founded on the reasoning that the petitioner’s response to the Special Audit Report has been found to be incomplete/ inconclusive.
Accordingly, respondent no.2 proposed to raise a demand of ₹163, 91, 65,902/- on account of Integrated Tax, Central Tax and State Tax. In addition, respondent no.2 also proposed to recover interest and penalty. It is apparent from the SCN that it did not specifically deal with the replies sent by the petitioner to the Special Audit Report. It merely stated that the same had been found to be incomplete or inconclusive
In the given circumstances, the petitioner furnished a detailed reply to the SCN, seeking to counter the allegations made in the Special Audit Report.
The petitioner has also contested the allegation that it had incorrectly disclosed lower revenue in the Goods and Services Tax (GST) returns in comparison to its receipts as reflected in its bank statements. It was the petitioner’s case that it held separate registrations in respect of its offices and had filed separate returns in respect of each registration. However, the bank account was common.
The issue regarding the mismatch between the GST returns filed by the petitioner and the credit entries in its bank account forms the basis of the majority of the demand; however, the impugned order neither addresses any of the contentious issues nor includes respondent no.2’s analysis on them, merely stating that the demand raised in the SCN is confirmed.
The Company would wish to submit that all proceeds are received by the Company through banking channels and all GST liability is duly discharged on the sale of tickets made from Delhi location and other GST registrations. Accordingly, the demand raised in the captioned point does not hold good.
The division bench of Justice Vibhu Bhakhru and Justice Sachin Datta observed that the impugned order, being bereft of any reasons and failing to consider the contentious issues, is liable to be set aside and it was so directed.
Further the matter was remanded to the Adjudicating Authority for considering afresh. The Adjudicating Authority shall consider the reply and the additional submissions filed by the petitioner and take an informed decision after affording the petitioner an opportunity of being heard. Accordingly, the present petition was allowed.
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