High Court Quashes GST Order Passed Without Applying Mind

The petitioner, Jakam Sekar Ranjith, received a GST order for the assessment year 2020-21 as a mismatch was found by the tax officer. As per the learned counsel of the sales made by the petitioner for the assessment year were Rs 1,66,30,418. However, the purchaser recorded outward supplies worth Rs. 1,21,01,218 only. This means there is a difference of Rs. 45,29,200 between the sales reported by the petitioner and the outward supplies reported by the purchaser. The learned counsel for the petitioner submitted that the petitioner stored some stock goods to meet the requirements of the purchaser.

Submission Made by Petitioner’s Learned Counsel

The learned counsel of the petitioner made the following submissions:

• The petitioner had already given a written explanation, but it was not accepted by the respondent.
• The order was passed without giving a chance to be heard, which is a violation of natural justice.
• If the petitioner had been given a chance to be heard, the petitioner would have explained the reason for the difference.
• The petitioner was also willing to pay 10% of the disputed tax.

Court’s Decision

The court observed that the tax officer must apply their mind and consider all facts and evidence before making a decision. Not giving the opportunity to be heard before passing the order is a waste of time. The tax officer failed to follow natural justice by not allowing a personal hearing. Officers must clearly say what documents they want and give time to submit them.  Therefore, the assessment order was set aside and sent back to the tax officer for fresh consideration. The court directed that:

• The petitioner must pay 10% of the disputed tax within 2 weeks.
• After payment, he must submit documents and a detailed reply within 2 more weeks.
• The officer must then give at least 14 days’ notice for a personal hearing and pass a fresh order after considering everything.