Delhi High Court alert on GST
Case Background
In the case of Malaysia Airlines Berhad Vs. Commissioner of Delhi Goods and Services Tax, Department of Trade and Taxes, Writ Petition (C) No. 9741 of 2024, dated July 18, 2024, the petitioner filed the petition against the impugned order passed for FY 2018-19 pursuant to the Show Cause Notice dated 31.01.2024 and the order dated 27.04.2024.
The impugned order stated that the petitioner’s response to the Special Audit Report had been found to be incomplete and inconclusive.
Issue Raised in the Show Cause Notice
The SCN stated that there was less revenue disclosed in GST return in comparison to bank statements.
In consequence of the SCN, the petitioner submitted the following reply:
“It has been further observed by the special auditor and alleged by your good self that there is difference of INR 815,19,62,101/- between total receipts as credited in bank account of the Company and outward supplied reported in GST returns for the State of Delhi. Based on the said difference, your good self has raised a tax demand amounting to INR 146,73,53,178/- along with applicable interest and penalty”.
Petitioner’s Submission
The Company submitted that the demand raised in this observation was based upon multiple assumptions and presumptions. It was further submitted that the auditor had recorded its findings without any application of mind, particularly to the extent that a company having multiple GST registrations can operate a single bank account for its PAN India operations. This issue is also relevant from a broader taxation advisory services perspective, especially where tax positions are being tested through audit-based turnover comparisons and documentary review.
Observations of the Court
The Court accepted the explanation of the petitioner and found that the Assessing Officer had not applied his mind to the fact that the turnover for an entity operating in multiple States in India, as reflected in the financial statements, and the turnover attributable to its operations in Tamil Nadu would vary.
Accordingly, the Court recognized that the comparison adopted in the proceedings was not properly reasoned in the facts of the case. Where such disputes involve broader interpretational issues, entity-level filings, or cross-functional tax positions, aligned review under indirect tax advisory services may also be relevant alongside GST-specific analysis.
Decision of the Court
In view of the above, the impugned order was held liable to be set aside and the matter was remanded to the Adjudicating Authority for fresh consideration. The Court directed the authority to:
- Consider the petitioner’s reply
- Consider the additional submissions
- Take an informed decision
- Provide the petitioner an opportunity of being heard
Held that the present petition is allowed in the aforesaid terms. All pending applications also stand disposed of.
Additional Resources
To further understand the broader implications of GST scrutiny, special audit findings, and litigation arising from turnover mismatches and procedural lapses, the following resources provide relevant context: