Case Law Details
B K T Spin Dish Private Limited Vs State Tax Officer (Madras High Court)
The case of B K T Spin Dish Private Limited vs State Tax Officer revolves around a challenge to an original tax order dated September 27, 2023, on the grounds of denial of a reasonable opportunity to contest the tax demand on its merits. The petitioner alleges that they were unaware of the proceedings leading to the impugned order until March 2024, when they received information about the attachment of their bank account. This lack of awareness stemmed from the authorities uploading notices and orders exclusively on the GST portal without any direct communication to the petitioner.
Petitioner’s Claims:
The petitioner contends that Input Tax Credit (ITC) was erroneously reversed in the impugned order based solely on the supplier’s non-existent recording, despite the petitioner possessing invoices, proof of payments, and other supporting documents. They argue that given the opportunity, they can demonstrate to the tax authorities that they rightfully claimed eligible ITC. The petitioner is willing to remit 10% of the disputed tax demand as a condition for the case to be reconsidered.
Respondent’s Position:
Mr. C. Harsha Raj, the learned Additional Government Pleader representing the respondents, acknowledges the notice in Form ASMT 10, the show cause notice, and claims that personal hearing opportunities were provided before the issuance of the impugned order.
Court’s Analysis:
Upon reviewing the impugned order, the court notes that the tax dispute centers around supplies received from Kiran Distributors. The petitioner has submitted copies of relevant invoices from the supplier, along with bank statements and ledger accounts demonstrating payments made. In light of these submissions and the petitioner’s claim of procedural deficiencies, the court determines that justice requires providing the petitioner with an opportunity to contest the tax demand on its merits, albeit subject to certain conditions.
Court’s Decision:
The court sets aside the original order dated September 27, 2023, under the condition that the petitioner remits 10% of the disputed tax demand within a maximum period of two weeks from the receipt of the court’s order. During this period, the petitioner is permitted to file a reply to the show cause notice.
Upon verification that the petitioner has remitted the required amount and the reply to the show cause notice is satisfactory, the State Tax Officer is directed to afford a reasonable opportunity to the petitioner, including a personal hearing. Subsequently, a fresh order must be issued within three months from the date of receiving the petitioner’s reply.
The court also notes that with the setting aside of the assessment order, the attachment of the petitioner’s bank account is lifted.
Conclusion:
The writ petition numbered W.P.No.11949 of 2024 is disposed of based on the aforementioned terms, with no costs imposed on either party. Additionally, the related miscellaneous petitions, numbered W.M.P.Nos.13035, 13036, and 13037 of 2024, are closed.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
An order in original dated 27.09.2023 is challenged on the ground of denial of a reasonable opportunity to contest the tax demand on merits. The petitioner asserts that it was unaware of proceedings culminating in the impugned order until receipt of information regarding the attachment of the petitioner’s bank account in March 2024. The reason for not being aware is that the notice and orders were uploaded on the “view additional notices and order tab of the GST portal” and not communicated to the petitioner through any other mode.
2. Learned counsel for the petitioner submits that Input Tax Credit (ITC) was reversed under the impugned order merely by recording by the supplier is non existent, whereas the petitioner has the invoices issued by the supplier, proof of payment and other documents. If provided an opportunity, learned counsel submits that the petitioner would be in a position to satisfy the tax authorities that the petitioner had availed of eligible ITC. On instructions, she submits that the petitioner is ready to remit 10% of the disputed tax demand as a condition for remand.
3. Mr. C. Harsha Raj, learned Additional Government Pleader, accepts notice for the respondents. He points out that the impugned order was preceded not only by a notice in Form ASMT 10 and a show cause notice, but also by personal hearing opportunities.
4. On perusal of the impugned order, it is evident that the tax proposal pertained exclusively to supplies received from Kiran Distributors. The petitioner has placed on record copies of relevant invoices issued by the said supplier, the bank statement relating to payments made to such supplier and the relevant ledger account. In these circumstances, the interest of justice warrants that the petitioner be provided an opportunity to contest the tax demand on merits, albeit by putting the petitioner on terms.
5. For reasons set out above, impugned order dated 27.09.2023 is set aside on condition that the petitioner remits 10% of the disputed tax demand as agreed to within a maximum period of two weeks from the date of receipt of a copy of this order. Within the said period, the petitioner is also permitted to submit a reply to the show cause notice. Upon receipt thereof 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 a period of three months from the date of receipt of the petitioner’s reply. In view of the assessment order being set aside, the bank attachment stands raised.
6. W.P.No.11949 of 2024 is disposed of on the above terms. No costs. Consequently, W.M.P.Nos.13035, 13036 and 13037 of 2024 are closed.
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