The Hon'ble Allahabad High Court in Radiant Cash Management Services Ltd. v. Deputy Commissioner, State Tax, Writ - C No. 6394 of 2024, Allahabad High Court, July 26, 2024 held that where the revenue issued a notice highlighting discrepancies between the assessee's GSTR 2A and GSTR 3B, and despite the assessee's detailed replies, including clarification that a notice mistakenly addressed to M/s Paridhee did not pertain to them, the revenue issued a demand notice under Section 73. The Court disposed of the writ petition by directing the revenue to consider the assessee's earlier reply regarding its own returns only.
Facts of the Case:
The Petitioner, Radiant Cash Management Services Ltd., is a company engaged in Cash Logistics business, serving as a connecting point between banks and their clients. They provide Retail Cash Management, Cash in Transit, and ATM Cash Replenishment Services to various Public and Private Sector Banks and Multi National Banks. The company has its registered office in Chennai and a regional office in Lucknow, Uttar Pradesh.
On February 17, 2023, the revenue issued a notice pointing out discrepancies and mismatches between form GSTR-2A and GSTR-3B. The Petitioner replied to this notice on March 23, 2023. After this, no further notice was issued, leading the Petitioner to presume that the proceedings for the financial year 2019-20 had lapsed.
However, on March 27, 2024, the revenue suddenly issued another notice under Form ASMT-10. This notice was addressed to M/s Paridhee Creation with GSTIN 09ABOPK2567M1ZY, along with a separate notice addressed to the Petitioner. The notice meant for M/s Paridhee Creation was mistakenly tagged/attached to the notice issued to the Petitioner.
The Petitioner sought an extension of time to submit its reply, as it had no connection to the notice issued to M/s Paridhee Creation. On May 14, 2024, the Petitioner furnished a detailed reply to the notice, clarifying that the notice addressed to M/s Paridhee Creation did not pertain to them. They also provided details regarding the alleged mismatch in their own case.
Despite this clarification, the revenue issued a notice under Section 73 of the U.P. GST Act on May 28, 2024, proposing a demand of Rs. 11,79,948/- along with Rs. 8,62,542/- and a penalty of Rs. 1,17,994/- for the period April 2019 to March 2020. This notice under Section 73 reproduced the Table that was indicated in the notice issued to M/s Paridhee Creation.
Aggrieved by this, the Petitioner filed the present writ petition, arguing that the notice under Section 73 had been issued without proper application of mind.
Held:
The Hon'ble Allahabad High Court in Writ - C No. 6394 of 2024 held that:
Court observed that the crux of the Petitioner's grievance lay in the non-consideration of their earlier reply. This reply had explicitly pointed out that the notice contained facts and figures relating to M/s Paridhee Creation, an entity with which the Petitioner had no connection whatsoever. The Court recognized the importance of this distinction and the potential for confusion it could create in the assessment process.
Court opined that the interests of justice would be best served if the respondent were to consider the Petitioner's earlier reply, focusing specifically on the information pertaining to the Petitioner's own company. The Court emphasized the need to examine any mismatches or deficiencies found in the Petitioner's returns, rather than those of an unrelated entity.
In light of these observations, the Court issued a directive to the Petitioner, instructing them to submit a detailed reply to the notice under Section 73 within one week from the date of the order. The Court specifically mandated that this reply should exclusively refer to the Petitioner's own returns and should not address the case of M/s Paridhee Creation. Furthermore, the Court clarified that the Petitioner was at liberty to deny any liability arising from the notice under
Section 73 that was mistakenly addressed to M/s Paridhee Creation.
To ensure a fair and comprehensive review of the case, the Court directed the respondent to take an informed decision after providing a personal hearing to the Petitioner's representative. This hearing could be conducted through video conferencing if necessary and was to be completed within four weeks of receiving the Petitioner's reply.
Court underscored the importance of focusing on the relevant information and avoiding confusion caused by the mistaken inclusion of another entity's details. By issuing these specific directions, the Court aimed to rectify the procedural oversight and ensure that the assessment process proceeded based on accurate and pertinent information.
Court disposed of the writ petition with these detailed instructions, emphasizing the need for the revenue authorities to consider the Petitioner's earlier submissions carefully and to base their assessment solely on the Petitioner's own returns and financial data.
Relevant Sections:
Section 73 of Central Goods and Services Tax Act, 2017/Uttar Pradesh Goods and Services Tax Act, 2017:
"Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason other than fraud or any wilful misstatement or suppression of facts"
Arguments by Lawyers:
Petitioner's Counsel:
- Argued that mentioning a Table related to M/s Paridhee Creation in the notice under Section 73 showed that the respondent had not examined the Petitioner's earlier reply carefully.
- Emphasized that the Petitioner could not possibly submit a reply regarding mismatches in returns filed by M/s Paridhee Creation, as it was a completely different company.
Respondent's Counsel:
- Presented a copy of instructions from the Deputy Commissioner, State Tax, Division-9, Lucknow.
- Stated that the notice under Section 61 was issued on March 27, 2024, and the subsequent notice under Section 73 was issued on May 28, 2024, after considering the Petitioner's explanation unsatisfactory.
- Informed that the Petitioner's request for an extension of time had been accepted, and time up to July 25, 2024, had been given to submit a reply.
- Argued that the show cause notice enumerated discrepancies found in the earlier reply and that the Petitioner had every opportunity to submit a detailed reply and appear personally to explain its case.
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