No, the Honorable Madras High Court in Perfect Assayers (P.) Ltd. v. State Tax Officer (ST) (W.P. No.12083 of 2024 dated 03.06.2024] allowed the writ petition and set aside the Order-in-Original when reply filed by the taxpayer in response to the discrepancies raised in returns has not been taken into consideration. The Honorable Madras High Court noted that the Operative part of the impugned order is bereft of any proper reasoning as the explanation provided in relation to discrepancies as per the SCN by way of reply filed has not been taken into consideration and has not discussed properly the explanation and recorded the reason for rejecting the petitioner’s explanation in the impugned order. The Honorable Court held that the impugned order is set aside and the matter is remanded back for reconsideration.
Author’s Comments
There is an urgent need to understand that the linear comparison of two different data sets is meaningless in GST. Yes, it may raise suspicion but no adverse inference can be made regarding non-payment, short-payment, or evasion of taxes.
In this particular case, output tax (GSTR-1 not matching GSTR-3) is demand citing data differences without stating (i) the nature of supply (ii) the taxability of the same (iii) the HSN code (iv) the time of supply, and (v) the place of supply. Without these taxing ingredients, any demand for output tax is arbitrary and illegal.
This principle has been laid by the Honorable Apex Court in the case of Govind Saran Ganga Saran v. CST * Ors. AIR 1985 SC 1041, where it was held that four ingredients are required to be present in any proceedings to demand tax.
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