Vaduvambikai Enterprises Vs State Tax Officer (Madras High Court)
In a significant ruling, the Madras High Court addressed the procedural lapses in the case of Vaduvambikai Enterprises versus the State Tax Officer. The court emphasized the importance of offering a personal hearing under Section 75(4) of the GST Act before issuing an adverse order.
The case centers around an order issued on December 30, 2023, which Vaduvambikai Enterprises challenged on the grounds of not being granted a personal hearing. Vaduvambikai Enterprises, a partnership firm initially represented by Mr. T. Logeswaran, argued that the order violated their right to a fair hearing under Section 75(4) of the GST Act.
Background of the Case
Vaduvambikai Enterprises is a registered entity under the Tamil Nadu Value Added Tax Act, 2006, engaged in works contracts where tax is deducted at source. The firm claimed entitlement to transition the deducted TDS into the GST regime as input tax credit (ITC). The dispute arose over a tax proposal amounting to Rs. 6,65,396, which the petitioner argued could be justified if given a chance to present their case.
Procedural Lapse
The firm’s counsel pointed out that while an initial show cause notice dated December 5, 2022, mentioned a personal hearing, a subsequent notice on September 20, 2023, did not. The final order issued in December 2023 failed to provide evidence of a personal hearing, violating Section 75(4) of the GST Act, which mandates a hearing when an adverse order is proposed.
