Facts of the Case

The petitioner, a registered taxpayer under the GST Act, 2017 engaged in construction of residential buildings, faced inspection by the 2nd respondent upon authorisation from the Joint Commissioner (ST), Nellore, followed by a show cause notice regarding taxable supply of construction services to independent buyers under Section 2(108). The petitioner had submitted a one-time option (Annexure-IV) to pay tax at a concessional rate, acknowledged by the 3rd respondent's office on 08.05.2019, and its authorised representatives furnished a copy of this letter at the personal hearing. Despite this, the 2nd respondent passed an order in Form GST DRC-07 dated 19.05.2022 denying the option on the ground that the option form was 'not available' and 'not traced' in the 3rd respondent's office, levying tax at the higher rate for the period October 2018 to November 2020 along with interest and penalty at 10%.

Issues Involved

  1. Whether the assessing authority could deny the petitioner's one-time concessional tax option under the GST Act solely because the option form could not be traced in the office of a different, regular assessing authority, despite the petitioner producing an acknowledged copy at the personal hearing.

Petitioner's Arguments

  • The authorised representative personally attended the hearing before the 2nd respondent and furnished a copy of the letter submitted to the 3rd respondent, acknowledged on 08.05.2019, but the impugned order failed to account for this document.
  • Levying tax for October 2018 to November 2020 with 10% interest and penalty at the higher rate, disregarding the submitted option, was improper and contrary to the GST Act.

Respondent's Arguments

  • In the absence of confirmation of Annexure-IV from the 3rd respondent's office, the 2nd respondent was justified in passing the impugned order.

Court Order / Findings

  • The impugned order itself recorded that the 3rd respondent's office had, by email, stated the option form 'was not available' and 'not traced,' yet the taxpayer's representatives had furnished a copy of the confirmation letter dated 10.05.2022 at the personal hearing.
  • Where the taxpayer has produced documentary proof of having submitted a statutory option, an assessing authority cannot deny that option merely because a different office failed to locate its own copy of the same document; the burden lies on the department to verify, not to presume against the taxpayer.
  • The impugned order dated 19.05.2022 was set aside and the matter remitted to the 2nd respondent with a direction to receive and examine the confirmation copy of Annexure-IV, verify its genuineness, and pass a fresh order after hearing both parties.

Important Clarification

  • A taxpayer's documented and acknowledged submission of a statutory option or declaration cannot be disregarded solely because the department's own internal records cannot trace it; the assessing authority must independently verify such documents rather than proceeding on an adverse presumption against the taxpayer.

Sections Involved

  • Section 2(108), CGST Act, 2017 - defines 'taxable supply' of goods or services.
  • Form GST DRC-07 - summary of the order creating demand under the GST Act.

Decision – In Favour of

The writ petition was allowed in favour of the Assessee, with the impugned demand order set aside and the matter remanded for fresh verification and adjudication.

Case Details

Court: High Court of Andhra Pradesh
Case No.: WP No.26140 of 2022
Coram: Justice U. Durga Prasad Rao and Justice Venkata Jyothirmai Pratapa
Date of Order: 17.08.2023

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