Order Date – 15 February 2024

Parties: SIP Academy India Pvt. Ltd Vs State Tax Officer

Facts –

• The Petitioner, SIP Academy India Pvt. Ltd, carries on the business of providing services to children for skill development. Pursuant to an inspection of the petitioner's premises in March, 2022, it was alleged that they have not discharged GST on director's remuneration, miscellaneous expenses and sale of painting and art works.
• It was submitted by the petitioner that the impugned assessment order was issued without considering the petitioner's replies and that such orders disclose non-application of mind.

Issue –

• Whether the order passed without considering the petitioner's replies valid?

Order –

• The Single Bench of Hon’ble High Court observed that on examining the reply dated 15.06.2023 of the petitioner, found that the petitioner has stated categorically that remuneration was paid to Dinesh Victor, Managing Director of the company. In view of such reply, the conclusion that the petitioner did not clarify the category of directorship is unsustainable.
• Further, the petitioner, in its reply of 15.06.2023, relied upon notifications under which registered persons are exempt from paying GST under reverse charge mechanism up to a specified limit or for a specified period. The petitioner also explained that some of the purchases under each head were from registered dealers. 
• In these circumstances, the imposition of tax, penalty and interest on the basis of the total expenditure incurred towards advertisement and business promotion, repairs and maintenance, and computer and software maintenance, by drawing on figure res provided in the respective financial statement is a conclusion reached without proper application of mind. 
• In spite of the petitioner's replies, the Assessing Officer recorded the bizarre conclusion that the petitioner was engaged in the sale of painting and art works. These conclusions indicate non application of mind to the material placed on record. Hence, the orders impugned herein warrant interference. For reasons set out above, this writ petition is allowed and the orders impugned herein are quashed. As a corollary, this matter is remanded for reconsideration by the Assessing Officer.