Case Law Details
M. Arumugam Vs Deputy State Tax Officer (Madras High Court)
In the case of M. Arumugam vs Deputy State Tax Officer-I, the Madras High Court addressed the challenge against an assessment order and a bank attachment notice. The petitioner had received notices regarding discrepancies in their GST returns and subsequent tax demands.
The petitioner had replied to a notice dated 05.02.2023 but mistakenly indicated the wrong assessment period. Subsequently, the petitioner did not respond to a show cause notice dated 19.09.2023, leading to the issuance of the impugned assessment order.
The petitioner’s counsel argued that the tax demand for IGST should not apply to imports from a Special Economic Zone (SEZ) to the domestic tariff area. Additionally, the petitioner claimed entitlement to the benefit of Circular No.183 regarding input tax credit claimed in respect of CGST and SGST.
The Government Advocate pointed out the petitioner’s failure to reply to the show cause notice or participate in proceedings. However, the petitioner had submitted relevant documents regarding purchases from a SEZ unit, which were not considered due to the lack of a response to the show cause notice.
The court, while acknowledging the petitioner’s failure to reply, granted an opportunity to contest the tax demand. The impugned order was quashed, subject to the condition that the petitioner remits 10% of the disputed tax demand within two weeks and submits a reply to the show cause notice within the same period.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
An assessment order dated 28.10.2023 and a bank attachment notice are challenged in these writ petitions.
2.The petitioner received a notice in Form ASMT 10 dated 05.02.2023 in relation to discrepancy between the GSTR 3B returns of the petitioner and auto-populated GSTR 2A returns. The petitioner states that such notice was replied to on 29.03.2023, but the petitioner erroneously indicated the wrong assessment period, i.e. 2021-22 instead of 2017-18, in the reply. Since the petitioner was under the misconception that such proceedings had been dropped, it is stated that the petitioner did not reply to the show cause notice dated 19.09.2023 or participate in proceedings culminating in the impugned assessment order.
3. Learned counsel for the petitioner submits that the impugned order relates to two issues. The first issue being a tax demand for IGST. On this issue, she submits that the petitioner had received supplies from a SEZ unit and that Rule 36(4) of the applicable rules do not extend to imports made from a SEZ to the domestic tariff area. Consequently, she submits that the tax demand should not have been confirmed with regard to IGST merely on account of mismatch. As regards the discrepancy between the input tax credit claimed in respect of CGST and SGST, she submits that the petitioner is entitled to the benefit of Circular No.183. On instructions, she submits that the petitioner agrees to remit 10% of the disputed tax demand as a condition for remand.
4. Prasanth Kiran, learned Government Advocate, accepts notice for the first respondent. He points out that a personal hearing would have been offered in the summary to the show cause notice which has not been placed on record. He also submits that the petitioner admittedly did not reply to the show cause notice or participate in proceedings.
5. From the petitioner’s reply to the notice in Form ASMT 10, it appears that the petitioner had purchased goods from a SEZ unit under bills of entry. The relevant invoices and other documents have been attached to the reply. Since a reply was not submitted to the show cause notice, these facts were not taken into consideration while issuing the impugned order. In these circumstances, albeit by putting the petitioner on terms, an opportunity should be provided to the petitioner to contest the tax demand.
6. Therefore, the impugned order dated 28.10.2023 is quashed subject to the condition that the petitioner remits 10% of the disputed tax demand within a period of two weeks from the date of receipt of a copy of this order. The petitioner is also permitted to submit a reply to the show cause notice within the aforesaid period. Upon receipt of the petitioner’s reply and upon being satisfied that 10% of the disputed tax demand was received, the first respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within two months from the date of receipt of the petitioner’s reply. In view of the assessment order being quashed, the bank attachment notice is also quashed.
7. W.P.Nos.8702 & 8707 of 2024 are disposed of on the above terms and connected miscellaneous petitions are closed. No costs.
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