Vela Agencies Vs Assistant Commissioner ST FAC (Madras High Court)
In the case of Vela Agencies versus Assistant Commissioner ST FAC before the Madras High Court, the petitioner challenged an order dated 23.06.2023 on the grounds that it deviated from the show cause notice. The petitioner had received an intimation dated 24.11.2022 and a show cause notice dated 29.12.2022. In response, the petitioner explained that their business as a distributor of Aircel Limited ceased due to the closure of Aircel’s business after 28.02.2018. However, the impugned order was issued imposing a tax liability of Rs.14,97,072/-, significantly higher than the initial estimate of Rs.8,27,252/- based on sales suppression.
The petitioner’s counsel argued that the imposition of tax liability was based on a comparison between the petitioner’s GSTR 3B return and the GSTR 2A, and that a reversal of Input Tax Credit from the petitioner’s electronic credit ledger had also been made. Hence, the counsel contended that the matter required reconsideration.
The learned Government Advocate representing the respondent accepted notice and argued that, considering the petitioner’s response to the intimation, they were not entitled to Input Tax Credit, thereby justifying the imposition of tax liability.
Upon examination of the intimation and show cause notice, the court found discrepancies between the initial tax proposal and the imposed tax liability in the impugned order. While the initial proposal was based on sales suppression, the order deviated from this basis. Furthermore, the petitioner’s electronic credit ledger had been debited, indicating a change in circumstances.
