Tvl. Arumugasamy Alloy Metal Suppliers Vs Deputy State Tax Officer-2 (Madras High Court)
The Madras High Court addressed a writ petition filed by Tvl. Arumugasamy Alloy Metal Suppliers against the Deputy State Tax Officer-2, concerning an assessment order for the financial year 2018-19. The petitioner, a metal trader registered under the Goods and Services Tax (GST) Act, challenged an order that reversed input tax credit availed from invoices issued by Jaya Trading Company. This reversal stemmed from an investigation by the CGST and Central Excise Department, which alleged that Jaya Trading Company fraudulently passed on input tax credit without actual goods supply, a practice known as bill trading. The petitioner was identified as a recipient of such invoices, leading to the impugned order. Prior to the order, the petitioner received a DRC-01A notice, a show cause notice (DRC-01), and several opportunities for personal hearings, all of which were not utilized, resulting in the confirmation of the proposed tax reversal.
During the court proceedings, the petitioner’s counsel referred to a recent judgment, M/s. K. Balakrishnan, Balu Cables vs. O/o. the Assistant Commissioner of GST & Central Excise, and expressed willingness to pay 25% of the disputed tax. The petitioner requested a final opportunity to present objections before the adjudicating authority. The respondent’s counsel did not object to this proposal. Consequently, the court disposed of the writ petition with specific terms. The impugned order was set aside, contingent upon the petitioner depositing 25% of the disputed taxes within four weeks. Any previously recovered or paid amounts, including pre-deposits, were to be adjusted against this 25%. The assessing authority was directed to inform the petitioner of any remaining balance, which was to be paid within three weeks of notification. Non-compliance would result in the restoration of the original assessment order. Furthermore, any bank account attachments or garnishee proceedings were to be lifted upon compliance. Upon payment of the 25%, the original assessment order would be treated as a show cause notice, allowing the petitioner four weeks to submit objections with supporting documentation. The respondent was then required to consider these objections and pass orders after providing a hearing. Failure to comply with the payment or objection deadlines would restore the original assessment. No costs were awarded, and associated miscellaneous petitions were closed.
