The Goods and Services Tax Appellate Tribunal (GSTAT), Kolkata Bench, has set aside an appellate order in a dispute concerning a residential developer’s compliance with the requirement to procure 80% of inputs and input services from registered suppliers and found that the first appellate authority had passed a virtually non-speaking, ex parte order without deciding the dispute on merits.
The Bench of Satya Gopal Chattopadhyay (Judicial Member) and Anindya Mitra (Technical Member) remanded the matter to the adjudicating authority for fresh consideration and directed the authority to examine the taxpayer’s documents and reconciliations, provide an adequate opportunity of hearing, and pass a reasoned order within six months from communication of the Tribunal’s order.
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The case arose from proceedings against appellant/assessee, which was developing a residential apartment project at Kenduadihi in Bankura, West Bengal.
On analysing the developer’s profit and loss accounts for the financial year 2019–20, the proper officer took the view that the taxpayer had failed to procure the required 80% of inputs and input services from registered suppliers. The officer consequently considered the developer liable to pay GST at 18% under reverse charge.
The proceedings referred to West Bengal Notification No. 552-F.T. dated March 29, 2019, corresponding to Central Notification No. 3/2019–Central Tax (Rate) dated March 29, 2019. An adjudication order was subsequently issued under Section 73 of the Central Goods and Services Tax Act, 2017, demanding ₹7,86,524 in tax, along with interest and penalty.
The developer challenged the adjudication order before the first appellate authority, disputing the proper officer’s calculation of the total procurement of inputs and input services.
According to the first appellate order, the taxpayer had submitted copies of GSTR-2A, the project estimation, balance sheets, profit and loss accounts, and bank statements. However, the authority recorded that the remaining documents had not been produced despite adjournments and rejected the appeal.
The developer then approached the Tribunal under Section 112(1) of the CGST Act, challenging the appellate order dated December 5, 2024.
The Tribunal questioned whether the taxpayer’s non-appearance and failure to furnish documents relating to the procurement calculation had prompted the first appellate authority to dispose of the matter without addressing its merits.
The Bench described the decision as a “virtually non-speaking exparte order” and found it devoid of a decision on merits. It accordingly set aside the first appellate authority’s order.
The Tribunal’s decision did not determine whether the developer had actually satisfied the 80% procurement requirement or whether the tax calculation was correct. Those issues were left for examination in the fresh adjudication proceedings.
The Tribunal directed the taxpayer to submit the requisite documents and any reconciliations supporting its claim that 80% of the value of inputs and input services had been procured from registered suppliers in accordance with Central Notification No. 3/2019–Central Tax (Rate), as amended.
It also prescribed a specific procedure for receiving the evidence. The documents must be accompanied by a list, and the adjudicating authority’s office must acknowledge receipt under proper seal and signature.
The adjudicating authority was directed to examine the documents and other records, grant an adequate opportunity of hearing, and issue a reasoned and speaking order within six months from the date on which the Tribunal’s order is communicated.
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