Ramesh Agency Vs Assistant Commissioner (ST) (Madras High Court)
Madras High Court has set aside an assessment order passed by the tax authorities against Ramesh Agency for the assessment year 2017-18, citing concerns over parallel proceedings and the petitioner’s claim of unawareness of the demand until tax recovery. The court has remitted the matter back to the tax department for fresh adjudication after giving the petitioner an opportunity to be heard.
The case involved Ramesh Agency challenging an assessment order dated December 20, 2023. According to the petitioner, a show cause notice (SCN) in form DRC-01 was issued on September 28, 2023, which led to the impugned order. The petitioner stated that they did not participate in the proceedings that culminated in this order.
The explanation provided by Ramesh Agency for their non-participation was that they were already undergoing an audit under Section 65 of the TNGST Act, 2017, conducted by the second respondent (presumably a different tax official or unit) for the very same assessment year, 2017-18. The petitioner further submitted that parallel proceedings were initiated under Section 73 of the TNGST Act by the first respondent (Assistant Commissioner) via another DRC-01 notice around September 29, 2023. They claimed they were unaware of these parallel proceedings initiated under Section 73.
A crucial element highlighted by the petitioner was that they only became aware of the impugned assessment order dated December 20, 2023, after a significant amount of Rs. 7,62,834 was directly deducted from their Electronic Credit Ledger on March 20, 2024. This deduction, occurring nearly three months after the date of the assessment order, was the trigger for the petitioner discovering the existence of the order. The petitioner also alleged that the impugned order and related notices might have been backdated.
The learned Government Advocate, representing the tax respondents, argued that the writ petition was not maintainable as the petitioner had an effective alternate remedy available under Section 107 of the TNGST Act, which provides for filing an appeal before the Deputy Appellate Commissioner.
The High Court considered the submissions from both sides. While acknowledging that the petitioner had failed to respond to the initial DRC-01 notice dated September 28, 2023, which led to the ex parte assessment order, the court took note of the petitioner’s explanation regarding the ongoing parallel audit proceedings and the claim of being unaware of the separate Section 73 proceedings.
Significantly, the court was influenced by the fact that a substantial portion of the demanded tax had already been recovered by the tax department by deducting the amount from the petitioner’s Electronic Credit Ledger. The recovery taking place months after the order’s date, coupled with the petitioner’s assertion of unawareness until that point, appeared to weigh in the court’s decision.
Despite the availability of the alternate remedy of appeal under Section 107, the High Court chose to exercise its writ jurisdiction to set aside the impugned assessment order. This suggests the court found the circumstances, particularly the confusion arising from parallel proceedings and the manner/timing of the petitioner’s awareness of the final order, warranted intervention.
The court remitted the case back to the respondents for a fresh decision on the merits, in accordance with the law. The quashed order will be considered a corrigendum to the initial DRC-01 notice.
The court issued specific directions for the way forward. It directed Ramesh Agency to file a detailed reply to the show cause notice within 45 days from the date they receive a copy of the court’s order. The respondents were then directed to take up the case afresh, consider the petitioner’s reply and all submitted documents, and pass a final order on merits within 45 days thereafter.
Recognizing the financial impact of the recovered amount on the petitioner’s liquidity, the court also issued a directive to the respondents to re-credit 50% of the deducted sum (Rs. 7,62,834) back into the petitioner’s Electronic Credit Ledger.
With these directions, the writ petition was allowed, and connected miscellaneous petitions were closed.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
