The GST ( Goods and Services Tax ) order estimating outward supply at 110% of purchase value by invoking GST Rule 30 was remanded by the Madras High Court. The court set aside and remanded for reconsideration on 10% pre-deposit.
Harshini Exports, the assessee-petitioner, is engaged in the textile trade. The petitioner claims that materials were purchased in the financial year 2017-18, with a major portion sold in the following financial year.
Further claimed that, GST compliance was entrusted to a consultant. The show cause notice and other related notices were uploaded on the “view additional notices and orders” tab in the GST portal but were not communicated to the petitioner through any other means. Consequently, the petitioner remained unaware of the proceedings until May 2024, when a bank attachment notice was served.
K.A.Parthasarathy, the counsel for the assessee argued that the challenged order is fundamentally flawed because the GST Assessing Officer relied on Rule 30 of the GST Rules, which applies only in specific cases involving disputes over the value of supplies to related parties.
It was contended that the assessee’s closing stock could have adequately clarified the discrepancy between inward and outward supplies. Had the assessing officer invoked powers under Section 70 or Section 71 of the GST statutes to request details of the closing stock, the dispute could have been resolved. Additionally, in a gesture of cooperation, counsel submitted that the assessee is willing to remit 10% of the disputed tax demand as a precondition for remand.
The counsel for the respondent – GST department submitted that principles of natural justice were complied with by issuing intimation, show cause notice and by offering a personal hearing to the assessee.
The bench of Justice Senthilkumar Ramamoorthy reviewed the GST order and noted that the GST proposal was confirmed due to the non-receipt of objections from the taxpayer. It was also noted that the assessing officer estimated the outward supply value at 110% of the purchase value by invoking Rule 30 of the CGST Rules, 2017.
The High Court considered the the assessee’s counsel argued that Rule 30 was not applicable in this context and that the assessing officer could have issued summons to obtain clarification. Thus, considering the contentions and balancing the interest of the revenue, the court set aside and remanded the matter for reconsideration on 10% pre-deposit.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
