The challenge in this writ petition is to the order No. ZH370920OD45789 dated 21.09.2020 passed by the 2nd respondent vide Form GST DRC-07 by exercising power under Section 74(1) of the APGST Act, 2017.

2. The petitioner is a works contractor executing civil contract works for Nellore Municipal Corporation, 3rd respondent herein. The 2nd respondent issued notice dated 23.01.2020 under Section 74(1) of the APGST Act, 2017 for the tax period April, 2018 – March, 2019 claiming an amount of ₹ 15,69,002/- towards estimated tax payable with 6% interest basing on the data provided by the Comprehensive Financial Management System (CFMS) alleging that the payments received by the petitioner from the 3rd respondent were not tallying with the turnover reported through GST returns. The petitioner submitted his explanation dated 20.02.2020 with the available information clearly mentioning therein the reason for the difference.

However, the 2nd respondent, without considering the explanation and giving a reasonable opportunity of personal hearing to the petitioner, straight away issued summary order dated 21.09.2020 which is violative of the principles of natural justice.

Hence the writ petition.  

3. Heard learned counsel for the petitioner Sri P.V.A. Padmanabham and learned Government Pleader for Commercial Taxes appearing for the respondents.

4. Learned counsel for the petitioner would strenuously argue that the 3rd respondent used to make sporadic payments to the petitioner on availability of funds by making TDS, and in view of such irregular payments, the difference in the turnover submitted by the petitioner and the figures found in CFMS was occurred. In expatiation, he would submit that though the petitioner executed the works assigned by the 3rd respondent pertaining to the period prior to July, 2017, however, staggered payments were made to the petitioner subsequently as per its convenience. The petitioner was submitting GSTR 3B returns regularly, though the amounts were not regularly paid as per the contract or immediately after completion of the works. Therefore, as and when TDS was deducted by the 3rd respondent, GSTR 3B returns in support of said payments were being filed. This aspect has been clearly explained in the explanation dated 20.02.2020. Learned counsel lamented that in spite of his submission, the 2nd respondent did not consider his explanation in proper perspective and simply passed the summary order fixing the tax with interest at ₹ 22,82,579/-. He thus prayed to set aside the impugned order and remand the matter back to the 2nd respondent for fresh consideration.

5. Learned Government Pleader supported the impugned order and argued that the said order was passed only after taking into consideration the explanation submitted by the petitioner and that there is no flaw in the said order.

6. As can be seen, the main observation of the 2nd respondent in the impugned order dated 21.09.2020 is that the data projected in CFMS relating to payments received by the petitioner from various Departments for execution of the work contracts was not tallying with the turnover reported through GSTR 3B returns. Basing on such observation, he issued a notice in Form DRC-01A and called for the explanation of the petitioner which was submitted by the petitioner on 20.02.2020. In the explanation, his submission was that the variation between the payments received and the turnover mentioned in the returns was because of the fact that the payments made to him were only part payments and not complete bills. With reference to the aforesaid explanation of the petitioner, the 2nd respondent observed that the petitioner has not submitted the bills raised on the Department in support of his claim of amounts received in respect of VAT and GST Acts. Hence, the differential amounts arrived were to be treated as amounts received against the works executed in the GST period. So, the nub of the issue is that the impugned order was passed for the reason that the petitioner failed to produce the details of the bills raised by him on the 3rd respondent to show that certain amounts included in the tax period 2018-2019 were in fact related to previous assessment period for which TDS was already deducted. The submission of learned counsel for the petitioner is that in fact, the petitioner applied for necessary information relating to the bills raised by him and TDS deducted thereon by the 3rd respondent, but the 3rd respondent has not furnished the said information in time and in the meanwhile, the impugned summary order was passed by the 2nd respondent. His further submission is that due to the prevalence of Covid-2019 pandemic, the petitioner could not physically approach the 3rd respondent to pursue his matter for getting required information and that was also one of the reasons why he could not produce the relevant bills before the 2nd respondent.

7. On a conspectus of the above facts, we are of the considered view that an opportunity should be accorded to the petitioner to present his case before the 2nd respondent.

8. Accordingly, this writ petition is allowed setting aside the impugned order dated 21.09.2020 passed by the 2nd respondent with a direction that the 2nd respondent shall issue notice to the petitioner and afford an opportunity to him to present the relevant information in support of his contention, and consider the same and pass an appropriate order afresh in accordance with the governing law and rules. There shall be no order as to costs.

As a sequel, interlocutory applications, if any, pending for consideration shall stand closed.