Case Law Details
Bright Hardware Vs Deputy State Tax (Madras High Court)
In a significant judgment, the Madras High Court addressed the issue of inadvertent errors in GSTR 3B filings and their consequences. The case of Bright Hardware Vs Deputy State Tax highlighted the procedural lapses and the court’s emphasis on principles of natural justice.
Bright Hardware challenged an order dated 18.01.2024, which imposed a substantial tax demand. The petitioner argued that the tax demand was a result of an inadvertent error in the GSTR 3B return for September 2018. Specifically, an entry was mistakenly made in column 4(A)(3) (inward supply liable to reverse charge) instead of column 4(A)(5) (all other ITC).
The petitioner, represented by their counsel, claimed that the error was not intentional and was due to the oversight of a part-time accountant handling GST compliances. The counsel requested another opportunity to rectify the mistake and proposed remitting 10% of the disputed tax demand as a condition for reconsideration.
The Additional Government Pleader, Mr. T. N. C. Kaushik, argued that all principles of natural justice were followed. Notices and show cause notices were duly issued, and a personal hearing was offered. The respondent maintained that the tax liability was correctly imposed based on the filed returns.
Upon reviewing the impugned order and the GSTR 3B return in question, the court found merit in the petitioner’s contention. The error was indeed inadvertent, and the interests of justice required reconsideration of the tax demand.
The court set aside the impugned order dated 18.01.2024, subject to the condition that the petitioner remits 10% of the disputed tax demand within two weeks. The petitioner was allowed to submit a reply to the show cause notice and file a rectified return. The respondent was directed to provide a reasonable opportunity for a fresh hearing and issue a new order within three months.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
An order in original dated 18.01.2024 is assailed on the ground that the petitioner did not have a reasonable opportunity to contest the tax demand on merits. By asserting that the petitioner had engaged a part time accountant to handle GST compliances and was therefore unaware of proceedings culminating in the impugned order, the present writ petition was filed.
2. Learned counsel for the petitioner submits that an inadvertent error was committed while filing the GSTR 3B returns for September 2018 in as much as an entry was made in column 4(A)(3) relating to inward supply liable to reverse charge instead of reporting in column 4(A)(5) relating to all other ITC. According to learned counsel, the entire tax proposal arose as a consequence of this inadvertent error. Learned counsel seeks another opportunity and, on instructions, submits that the petitioner agrees to remit 10% of the disputed tax demand as a condition for remand.
3. Mr. T. N. C. Kaushik, learned Additional Government Pleader, accepts notice for the respondent. He submits that principles of natural justice were complied with by issuing notice in Form ASMT 10 dated 07.08.2023, intimation dated 11.09.2023, show cause notice dated 06.10.2023 and by offering a personal hearing.
4. On perusal of the impugned order, it is evident that tax liability was imposed with regard to reverse charge liability. The petitioner has asserted that tax liability arose on account of an inadvertent error while filing the GSTR 3B return for the month of September 2018. Such return has been placed on record. Prima facie, it appears that there is merit in the contention of the petitioner. In these circumstances, the interest of justice warrants reconsideration subject to the petitioner being put on terms.
5. For reasons set out above, the impugned order dated 18.01.2024 is set aside subject to the condition that the petitioner remits 10% of the disputed tax demand as agreed to within a period of two weeks from the date of receipt of a copy of this order. The petitioner is permitted to submit a reply to the show cause notice within the aforesaid period. The petitioner is also permitted to file a rectified return in accordance with law. Upon receipt thereof and upon being satisfied that 10% of the disputed tax demand was received, the 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.
6. The writ petition is disposed of on the above terms without any order as to costs. Consequently, connected miscellaneous petitions are closed.
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