Tvl. Prabha Drug House Vs Assistant Commissioner (ST) (FAC) (Madras High Court)
The Madras High Court recently set aside a tax order confirming a GST demand against Tvl. Prabha Drug House, citing the failure of the tax authorities to acknowledge a 58% payment made by the petitioner through their electronic credit ledger. The original order, dated May 7, 2024, had confirmed the full tax proposal based on a mismatch identified between the petitioner’s GSTR-1 and GSTR-3B returns.
The petitioner’s counsel informed the court that a reply to the show cause notice had been submitted, detailing the remittance of 58% of the disputed amount from their electronic credit ledger. Despite this, the entire initial tax demand was reportedly confirmed without considering this payment.
Mr. T. N. C. Kaushik, the Additional Government Pleader representing the respondents, acknowledged the oversight, conceding that the matter warranted reconsideration. Upon reviewing the impugned order, the High Court confirmed that no credit was extended for the 58% remitted.
Consequently, the Madras High Court quashed the May 7, 2024 order and remanded the case back to the first respondent for reconsideration. The tax authority has been directed to provide Tvl. Prabha Drug House a reasonable opportunity to present their case, specifically ensuring that the remittances made via the electronic credit ledger are taken into account during the fresh assessment. As a result of the assessment order being set aside, the consequential bank attachment acting as a garnishee was also lifted. No costs were awarded in the proceedings.
