Failure to Reflect RCM in GSTR 1 rectified in GSTR 3B and GSTR 9: Madras HC quashes GST Assessment Order [Read Order]

With the revenue interest secured by the appropriation from the petitioner's bank account, the petitioner sought a fair opportunity to address the issue
Madras High Court - GST - GSTR 1 - GST assessment order - taxscan

The Madras High Court has nullified a Goods and Services Tax ( GST ) assessment order, offering the petitioner a chance for a re-hearing. The bench observed that the petitioner unintentionally omitted to mention the applicability of GST under the Reverse Charge Mechanism ( RCM ) while filing GSTR 1, a mistake rectified in subsequent filings of GSTR 3B and GSTR 9.

The petition challenged the assessment order due to the ground that a reasonable opportunity was not provided.

The petitioner, a registered person under relevant GST laws, operates a business involved in the transportation of goods. During the assessment period 2019-2020, the petitioner asserted that the services provided were subject to tax on a reverse charge basis by the service recipient.

However, while filing the GSTR 1 return for October 2019, the petitioner inadvertently omitted to indicate the GST applicable on a reverse charge basis. This error was rectified in subsequent filings, including the GSTR 3B and annual GSTR 9 returns.

The petitioner alleged that proceedings were initiated without their knowledge, leading to the issuance of the impugned order. The petitioner’s counsel emphasised a communication dated 22.01.2024, where the petitioner explained the filing error and provided relevant documents. They requested another opportunity to rectify the mistake.

Mrs. K. Vasanthamala, Government Advocate representing the respondent, acknowledged the delayed response to the petitioner’s communication. She noted that the amount specified in the impugned order had already been withdrawn from the petitioner’s bank account.

The petitioner contended that the entire tax liability arises from an inadvertent error in the GSTR 1 return for October 2019, subsequently rectified in subsequent filings. With the revenue interest secured by the appropriation from the petitioner’s bank account, the petitioner sought a fair opportunity to address the issue.

The bench of Justice Senthilkumar Ramamoorthy, considering the circumstances, quashed the impugned order and remanded the matter to the respondent for reconsideration.

The court directed the respondent to afford the petitioner a reasonable opportunity, including a personal hearing, and to issue a fresh order within two months. The court clarified that any amounts appropriated under the impugned order would be subject to the outcome of the reconsideration.

Consequently, the writ petition was disposed of with no costs awarded, and connected miscellaneous petitions were closed accordingly.

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