Case Law Details
Quantum Associates Vs Deputy State Tax Officer (Madras High Court)
In the case of Quantum Associates Vs Deputy State Tax Officer, the Madras High Court addressed a dispute involving a mismatch between the petitioner’s GSTR 3B returns and the auto-populated GSTR 2A, ultimately allowing the petitioner to contest the demand on its merits. This summary explores the background, arguments, and the court’s decision in detail.
Background
Quantum Associates, the petitioner, filed two writ petitions challenging an assessment order and a consequential attachment order issued by the Deputy State Tax Officer. The petitioner claimed unawareness of the proceedings leading to the impugned assessment order because the show cause notice and the impugned order were only uploaded on the “View Additional Notices and Orders” tab on the GST portal and not communicated through any other mode.
Petitioner’s Arguments
The petitioner’s counsel argued that the tax demand was based on a mismatch between GSTR 3B returns and GSTR 2A. The petitioner contended that if given an opportunity, they could prove that only eligible Input Tax Credit (ITC) had been claimed. Additionally, the petitioner was willing to remit 10% of the disputed tax demand as a condition for remand.
Respondent’s Counterarguments
Representing the respondents, V. Prashanth Kiran, a Government Advocate, noted that a recovery notice was served on the petitioner on December 27, 2023, following the impugned assessment order. He argued that the petitioner was aware of the proceedings by at least that date. Moreover, the respondents maintained that the impugned order was preceded by a show cause notice and that sufficient opportunity had been provided to the petitioner to respond.
Court’s Observations and Decision
The court perused the impugned assessment order and acknowledged that the tax proposal was related to discrepancies between the petitioner’s GSTR 3B returns and the auto-populated GSTR 2A. It was clear that the tax proposal had been confirmed due to the petitioner’s failure to respond to the show cause notice.
The court concluded that, despite the procedural issues raised, the interest of justice necessitated giving the petitioner an opportunity to contest the tax demand on its merits. Thus, the court set aside the impugned assessment order dated November 2023 and remanded the matter for reconsideration, subject to the condition that the petitioner remits 10% of the disputed tax demand within two weeks from the receipt of the court’s order.
The court outlined specific instructions for the petitioner and the first respondent:
Petitioner’s Obligations:
- Remit 10% of the disputed tax demand within two weeks.
- Submit a reply to the show cause notice dated November 17, 2023, within the same period.
First Respondent’s Obligations:
- Upon receipt of the petitioner’s reply and confirmation of the 10% payment, provide a reasonable opportunity for the petitioner, including a personal hearing.
- Issue a fresh order within three months from the receipt of the petitioner’s reply.
Consequently, the court ordered that the bank attachment be lifted due to the setting aside of the impugned assessment order.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
By these two writ petitions, an assessment order and the consequential attachment order are challenged.
2. The petitioner asserts that he was unaware of proceedings culminating in the impugned assessment order because the show cause notice and impugned order were uploaded on the “View Additional Notices and Orders” tab on the GST portal, but not communicated to the petitioner through any other mode.
3. Learned counsel for the petitioner submits that the tax proposal pertained mismatch between the petitioner’s GSTR 3B returns and the auto- populated GSTR 2A. If an opportunity is provided, learned counsel submits that the petitioner would be in a position to establish that only eligible Input Tax Credit was availed. On instructions, learned counsel for the petitioner submits that the petitioner agrees to remit 10% of the disputed tax demand as a condition for remand.
4. V. Prashanth Kiran, learned Government Advocate, accepts notice for respondents 1 and 2. He points out that the recovery notice was served on the petitioner on 27.12.2023 after issuing the impugned assessment order. He contends that the petitioner was aware of proceedings at least on 27.12.2023. He also pointed out that the impugned order was preceded by a show cause notice and sufficient opportunity was provided to the petitioner.
5. On perusal of the impugned assessment order, it is evident that the tax proposal pertained to the mismatch between the petitioner’s GSTR 3B returns and the auto-populated GSTR 2A. It is also clear that the tax proposal was confirmed because the petitioner failed to reply to the show cause notice. In these circumstances, albeit by putting the petitioner on terms, the interest of justice warrants that an opportunity be provided to the petitioner to contest the tax demand on merits.
6. For reasons set out above, the impugned assessment order dated 11.2023 is set aside and the matter is remanded for reconsideration subject to the condition that the petitioner remits 10% of the disputed tax demand as agreed to within two weeks from the date of receipt of a copy of this order. Within the aforesaid period, the petitioner is permitted to submit a reply to the show cause notice dated 17.11.2023. 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 three months from the date of receipt of the petitioner’s reply. As a consequence of the impugned assessment order being set aside, the bank attachment is raised.
7. These writ petitions are disposed of on the above terms without any order as to costs. Consequently, connected miscellaneous petitions are closed.
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