In a recent ruling, the Allahabad High Court determined that a GST ( Goods and Services Tax ) demand order issued under Section 73 of the GST Act, which relied exclusively on findings from the Income Tax Department without independent verification, cannot be upheld.
The petitioner, engaged in trading jewellery and bullion, had his GST registration granted under the PAN of Anand Swaroop Rastogi, HUF. However, the petitioner’s business was closed as of September 30, 2017, and a new partnership firm was subsequently established with a different PAN.
A survey conducted by the Income Tax Department at the petitioner’s former business premises led to allegations that prompted proceedings under Section 73 of the U.P. GST Act.
The petitioner contended that these proceedings were initiated erroneously, as the business associated with the original PAN had been closed, and the new partnership firm operated under a separate PAN.
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Despite submitting a detailed reply to the show cause notice, which highlighted the differences between the old and new PANs, the impugned GST demand order was issued without addressing these objections.
Justice Piyush Agrawal noted that the crux of the issue was the reliance solely on findings from the Income Tax Department’s survey without independent verification. The petitioner’s business had been closed before the survey, and no evidence was provided to connect the old PAN to the partnership firm under scrutiny.
The court stated that “Further, no material has been brought on record to suggest that the Pan of (HUF), which was used by the proprietor for registration, was also used for the partnership firm to which the Income Tax Department conducted a survey in which excess stock was found, this fact was brought to the notice of the authority concerned, but without any independent finding, only on the finding recorded by the Income Tax Department, the impugned order has been passed.”
The High Court found that the impugned orders lacked independent findings and were thus unsustainable. The Court quashed the orders and remanded the matter for a fresh examination. The proper officer was directed to initiate new proceedings with a reasoned and detailed order, considering all relevant information, within three months from the production of the certified copy of the Court’s order.
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