The court highlighted the importance of proper application of tax law provisions and thorough assessment of taxpayer explanations in determining tax liabilities.

O R D E R

An order in original dated 09.11.2023 is challenged in this writ petition. Upon receipt of show cause notice dated 09.05.2023, the petitioner replied on 28.08.2023 and 31.08.2023. The impugned order was issued later on 09.11.2023.

2. Learned counsel for the petitioner referred to the impugned order at page nos.46 and 47 of the typed set of papers. As regards items 6 to 20 except items 12, 14 and 15, he submitted that all these items were subject to tax on reverse charge basis although these items are not notified for being taxed on reverse charge basis. In spite of providing an explanation that these expenses should be charged on forward charge and not on reverse charge basis, he submits that the tax proposal was confirmed without providing any reason in support of such conclusions. As regards Sl.no.24 pertaining to ineligible Input Tax Credit (ITC), learned counsel referred to the petitioner's reply and pointed out that this item pertains to a purchase by the petitioner in respect of which there was tax collection at source. Notwithstanding the petitioner's reply to such effect, learned counsel pointed out that it was concluded in the impugned order that the tax payer failed to report the outward supply of the goods. As regards Sl.nos.1 to 4, which pertain to the discrepancy between the petitioner's GSTR 1 and GSTR 3B, learned counsel contended that tax was imposed at 24% instead of the applicable rate of 12%. In addition, he pointed out that the petitioner's explanations that the discrepancy was subsequently rectified or that such discrepancy arose as a result of payment being made for a lower amount upon undertaking measurement of the civil work executed by the petitioner, as the case may be, was disregarded. On instructions, he submits that the petitioner agrees to remit 10%, if tax liability is computed on these four items at

12% instead of 24%.

3. Mr.T.N.C.Kaushik, learned Additional Government Pleader, accepts notice for the respondents. By referring to the impugned order, he points out that the principles of natural justice were complied with by duly taking note of the petitioner's reply to the show cause notice. He further submits that the impugned order is detailed and that findings were recorded therein after appraising the evidence on record. Consequently, he submits that no case is made out for interference under Article 226 of the Constitution of India.

4. As regards Sl.nos.6 to 20 of the table at page nos.46 & 47 of the typed set of papers, the objection of the petitioner is that most of these items do not fall within the reverse charge mechanism. On examining the impugned order in relation to these items, I find that the respondents have failed to examine as to whether tax liability may be imposed on the petitioner when the relevant goods or services do not fall within the reverse charge mechanism as per Section 9(3) read with applicable notifications in such regard. Therefore, the impugned order calls for reconsideration on these aspects.

5. Turning to item 24, which pertains to ineligible ITC, learned counsel for the petitioner contended that this pertains to purchases made by the petitioner and that tax was collected at source in respect thereof.

In spite of such reply, the finding recorded is as under:

“3.TCS deducted on purchase of vehicles –

Rs.95114334/-

The tax payer had been engaged in works contract. If a registered dealer sells a used motor vehicle GST is applicable. The rate of GST applicable on the sale of used motor vehicles is at 18% irrespective whether the buyer is a registered person or end user. The GST is due on the margin-i.e. difference on purchase and selling value. They have not furnished the book value of the vehicles used.

It is evidently proved that the tax payer had failed to report the outward supply of goods and discharged his tax liability during the year 2020-2021. Hence, the tax payer is liable to pay tax on Rs.95114334/- at 18% under CGST and SGST with interest. ”

The above fi