Availment Of Lower ITC Than Amount Reflected In Auto-Populated GSTR 2A Return Is Clear Non-Application Of Mind, Madras High Court Quashes Assessment Order

The Madras High Court has quashed the assessment order and held that the petitioner availed of a lower amount as ITC than the amount reflected in the auto-populated GSTR 2A return. The petitioner wrongly availed of ITC, which indicates non-application of mind.

The bench of Justice Senthilkumar Ramamoorthy has observed that, as regards the interest liability for belated filing of returns, the evidence on record reflects that the petitioner remitted sums of Rs. 3,97,353 each towards CGST and SGST on March 6, 2024.

The petitioner/assessee is in the business of supplying bricks, blocks, tiles, and ceramic goods. The petitioner asserts that he is uneducated and computer illiterate. Therefore, it is asserted that the petitioner was unaware of proceedings commencing with the issuance of an intimation dated January 19, 2023, and culminating in the impugned assessment order.

The petitioner contended that the assessing officer concluded that no further action was required. The petitioner had claimed input tax credit (ITC) of Rs. 54,000/- each for SGST and CGST in the GSTR 3B return, whereas the auto-populated GSTR 2A return reflected the availability of ITC to the extent of Rs. 3,23,967/- each towards SGST and CGST. The petitioner wrongly availed of eligible ITC, which is patently wrong and indicates complete non-application of mind. As regards the liability to pay interest, the sum of Rs. 3,97,353/- each towards SGST and CGST was remitted on March 6, 2024. In conclusion, a sum of Rs. 10,86,310 was appropriated towards the demand under the assessment order from the petitioner's bank account in the Canara Bank.

The department contended that both the intimation and show cause notice were served on the petitioner by post and not merely uploaded on the GST portal. Therefore, he submits that the principles of natural justice were clearly complied with.

The court quashed the assessment order, and the matter was remanded to the assessing officer for reconsideration. The petitioner was permitted to file a reply to the show cause notice within a period of two weeks from the date of receipt of a copy of this order. Upon receipt thereof, the assessing officer was directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh assessment order within a period of two months from the date of receipt of the petitioner's reply. Since the sum of Rs. 10,86,310/- was appropriated from the petitioner's Canara Bank account, the attachment notice issued to recover the tax demand shall stand raised, and the amount appropriated shall abide by the outcome of the remanded proceedings.

Counsel For Petitioner: Harini S.P.

Counsel For Respondent: V.Prashanth Kiran

Case Title: Vijaykumar Versus The State Tax Officer

Citation: 2024 LiveLaw (Mad) 119

Case No.: W.P.Nos.6772 & 6776 of 2024 and W.M.P.Nos.7543, 7545, 7548 & 7551 of 2024

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