Sri Shivsakthi Mercantile Private Limited Vs Assistant Commissioner (ST) (Madras High Court)
The Madras High Court recently reviewed a writ petition challenging an order under Rule 86B of the Tamil Nadu Goods and Services Tax (TNGST) Act, 2017, regarding the reversal of 1% Input Tax Credit (ITC) for a company. The petitioner argued that they were exempt from this rule due to their income tax payments exceeding Rs. 1,00,000 from FY 2019-2020, which should have allowed them to claim 100% ITC. The company contended that they were unaware of the notices uploaded on the GST portal under the “View Additional Notices and Orders” section and, as a result, missed the opportunity to file a response within the required time. Moreover, the petitioner was not provided a personal hearing before the impugned order was passed.
The court, acknowledging the lack of personal hearing, ruled that the principles of natural justice were violated. The petitioner was not given a fair chance to present their case, and the impugned order was passed without considering their exemption status under Rule 86B. As a result, the court set aside the order and remanded the matter to the first respondent for fresh consideration, instructing them to provide a 14-day notice for a personal hearing. The court also lifted the bank attachment imposed on the petitioner, allowing the bank account to be defrozen immediately. This decision emphasizes the importance of providing a fair hearing before passing orders that affect a taxpayer’s rights and obligations.
