Case Law Details
Hajee S M Ahamed and Company Vs Deputy State Tax Officer (Madras High Court)
The case of Hajee S M Ahamed and Company vs Deputy State Tax Officer revolves around a contentious issue of GST compliance regarding the generation of e-way bills. The Madras High Court recently delivered a significant judgment concerning a demand of ₹25,000 in GST and an imposing penalty of ₹1.36 crore, based on allegations of ‘Nil’ value e-way bill generation.
The petitioner, Hajee S M Ahamed and Company, challenged an order dated January 19, 2024, before the Madras High Court. The primary contention was the lack of communication regarding the proceedings leading to the order, with the petitioner only becoming aware upon receiving a recovery letter from the second respondent on May 27, 2024.
Legal counsel argued that while the tax demand was relatively modest at ₹25,000, a staggering penalty of ₹1.36 crore was levied for purportedly failing to generate e-way bills with proper value declaration. The petitioner asserted that e-way bills amounting to ₹6,81,55,597 were indeed generated, backed by an abstract sourced from the GST portal.
The court scrutinized the impugned order and found that substantial penalty hinged on allegations of ‘Nil’ value e-way bills. The petitioner furnished detailed records and an abstract illustrating substantial e-way bill transactions during the relevant period, amounting to ₹6,81,55,597. Additionally, a debit of ₹1,55,300 from the petitioner’s account covered the tax demand and part of the penalty.
In response, the government advocate contended that due process was observed, citing intimation, show cause notices, and reminders issued through official channels.
Ultimately, the Madras High Court ruled in favor of the petitioner, setting aside the order dated January 19, 2024. The court ordered a remand of the matter for reconsideration, allowing the petitioner to submit a comprehensive response to the show cause notice within 15 days. Furthermore, the court directed the authorities to afford a reasonable opportunity, including a personal hearing, and issue a fresh order within three months from receipt of the petitioner’s reply.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
An order in original dated 19.01.2024 is the subject of challenge in this writ petition. The petitioner asserts that he was unaware of proceedings culminating in the impugned order because the show cause notice and other communications were uploaded on the GST portal but not communicated to the petitioner through any other mode. It is further stated that the petitioner came to know of the impugned order only on 27.05.2024 upon receipt of a recovery letter from the 2nd respondent.
2. Learned counsel for the petitioner submits that the total tax demand under the impugned order is only about Rs.25,000/-, whereas penalty of about Rs.1.36 crore was imposed for alleged non generation of e-way bills. By referring to an abstract indicating the total value of e-way bill generation, learned counsel submits that e-way bills for a total value of Rs.6,81,55,597/-were generated. He also points out that a sum of Rs.1,55,300/- was debited from the petitioner’s bank account and that this amount not only covers the total tax demand but a portion of the penalty. He seeks another opportunity in these facts and circumstances.
3. Mr. K. Vasanthamala, learned Government Advocate, accepts notice for respondents 1 & 2. She submits that principles of natural justice were complied with by issuing intimation dated 24.05.2023, show cause notice dated 27.06.2023 and by issuing two reminders.
4. On examining the impugned order, it is evident that substantial penalty was imposed on the basis that the petitioner had generated e-way bills indicating nil value. The petitioner has placed on record details of e- way bills, as downloaded from the GST portal, and also prepared an abstract based on the data derived therefrom. Such abstract indicates that e-way bills were generated for the aggregate value of Rs.6,81,55,597/- during the relevant period. These facts and circumstances justify a remand especially in view of the petitioner’s account being debited to an extent of Rs.1,55,300/- on 19.06.2024.
5. For reasons aforesaid, the order dated 19.01.2024 is set aside and the matter is remanded for reconsideration. The petitioner is permitted to submit a reply to the show cause notice by annexing all relevant documents. Such reply shall be submitted within 15 days from the date of receipt of a copy of this order. Upon receipt thereof, the 1st 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 is raised.
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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