Tvl. VARS Enterprises Vs Assistant Commissioner (State Tax) (Madras High Court)
The writ petition challenged an assessment order dated 29.08.2024 passed under Section 73 of the Tamil Nadu GST Act, 2017.
The assessment order had been passed ex parte because the petitioner did not utilize the opportunities provided during the assessment proceedings. The assessment was based on four discrepancies: reconciliation issues between GSTR-1 and GSTR-3B, input tax credit (ITC) mismatch between GSTR-3B and GSTR-2A, declaration of ineligible ITC, and invalid ITC under Section 16(4) of the GST Act.
Before the Court, the petitioner contended that there was no difference in the reconciliation of GSTR-1 and GSTR-3B and sought an opportunity to submit a detailed reply with supporting records. Regarding the ITC mismatch, the petitioner asserted that there was no excess ITC claim under Section 16 and stated that compliance with Circular No. 183/15/2022 dated 27.12.2022 would eliminate any GST liability. Concerning the allegation of ineligible ITC, the petitioner maintained that ITC had been claimed only on business-related goods and therefore no ineligible credit had been availed. As regards the alleged invalid ITC under Section 16(4), the petitioner argued that the credit was eligible under Section 16(5), introduced through Section 128A, and therefore the issue of a belated ITC claim did not arise.
The petitioner explained that the assessment order had been uploaded on the GST portal without the petitioner’s knowledge and that the accountant had not informed the petitioner about the proceedings, resulting in non-participation.
The Court considered the nature of the discrepancies, the explanations offered on merits, and the reasons given for not availing the opportunities. It observed that an opportunity could be granted to the assessee to submit explanations and supporting documents before the assessing officer. The Court noted that such opportunities are generally granted on equitable grounds, subject to appropriate conditions.
The Court further observed that it normally directs deposit of 25% of the disputed tax amount as a condition for granting relief. However, since the petitioner contended that a substantial portion of the disputed tax demand related to the benefit claimed under Section 16(5) of the GST Act, the Court held that the requirement to deposit 25% would apply only to the balance disputed tax amount excluding the portion relating to Section 16(5).
Accordingly, the Court allowed the writ petition and directed the petitioner to deposit 25% of the disputed tax amount, excluding the issue raised under Section 16(5), within four weeks. Upon such deposit, the assessment order dated 29.08.2024 would stand set aside and the matter would be remanded to the assessing officer for fresh consideration. The petitioner was directed to appear before the assessing officer and submit replies and supporting documents, and the respondent was directed to reconsider the matter and pass orders in accordance with law. The Court also ordered that any bank account attachment made pursuant to the impugned assessment order would stand lifted upon setting aside the assessment. No costs were awarded.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
