In a significant ruling, the Madras High Court has set aside an assessment order passed under the Tamil Nadu Goods and Services Tax Act, 2017 (TNGST Act), emphasizing the importance of including the determination of Input Tax Credit (ITC) in the show cause notice itself. The court granted M/s. Hatsun Agro Product Ltd. (petitioner) the necessary opportunity to respond and provide supporting details for the claimed ITC.
The case revolved around the reversal of ITC claimed by the petitioner, which the Assessing Officer (AO) deemed ineligible and not rightfully claimed. The AO determined the amount to be reversed by comparing the ITC claimed under GSTR 3B and GSTR 2B.
Justice Anita Sumanth, the single judge hearing the case, found that the determination of the ITC should have been communicated to the petitioner in the show cause notice, allowing them sufficient time to respond and provide necessary documentation to support their claim.
The court noted that prior to the assessment order, the Assessing Authority had issued notices calling for specific particulars, including invoices, from the petitioner. However, it remained unclear whether the petitioner had provided the requested information in the prescribed manner and whether all supporting documents were submitted to the AO.
The court observed that the impugned order indicated that the AO had based the reversal determination on a comparison of the ITC claimed under GSTR 3B and GSTR 2B. It concluded that this determination should have been presented to the petitioner in the show cause notice before issuing the assessment order, ensuring they had ample opportunity to respond and provide details supporting their ITC claim.
Highlighting the exchange of general notices and insufficient responses from the petitioner prior to the assessment order, the court set aside the order and directed that it be treated as a show cause notice. The petitioner was instructed to appear on July 13, 2023, along with all the required details and supporting documents related to the reversal under the impugned order.
The court further clarified that if the petitioner fails to appear with the necessary materials on the specified date, the benefits granted under this order will be withdrawn without further reference to the petitioner. This decision emphasizes the significance of proper notice and opportunity to be given to taxpayers during the assessment process under the TNGST Act.
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