Madras HC Quashes GST Order, Directs 25% Tax Deposit for Fresh Hearing

TVL Zion Agencies Vs Deputy State Tax Officer (Madras High Court)

Madras High Court has quashed an assessment order dated December 12, 2023, issued against TVL Zion Agencies for the tax period 2017-18, related to a disputed tax amount of Rs. 50,11,324. The order was set aside on terms, primarily due to the petitioner’s non-participation in the prescribed adjudication mechanism.

The impugned order was preceded by several notices, including Form ASMT-10 (dated June 30, 2023, and September 29, 2023), Form DRC-01A (dated October 5, 2023), and multiple personal hearing notices in November 2023. The Court observed that the petitioner had not engaged in the adjudication process, leading to an adverse ex-parte order and a subsequent demand notice on March 12, 2024.

Citing similar circumstances in previous cases, where the Court provided relief by quashing assessment orders subject to a pre-deposit, the Madras High Court decided to adopt a similar approach.

The High Court has conditionally disposed of the Writ Petition. The impugned order stands quashed subject to the petitioner depositing 25% of the disputed tax amount in cash from their Electronic Cash Register with the respondent within 30 days of receiving the order copy. The petitioner is also directed to file a reply to the show cause notice that preceded the quashed order, which will now be treated as an addendum to the show cause notice. The respondent is directed to pass a fresh order on merits as expeditiously as possible after hearing the petitioner.

The Court clarified that failure to comply with these conditions would result in the Writ Petition being deemed dismissed, allowing the respondent to proceed with tax recovery as per GST enactments.

FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT

The petitioner is before this Court against the impugned assessment order, dated 12.12.2023, passed for the tax period 2017-18.

2. The impugned order precedes the following notices:-

3. Reading of the impugned order indicates that the petitioner has not participated in the adjudication mechanism prescribed under the TNGST Act, 2017/CGST Act, 2017 and has thus suffered an adverse order. The petitioner has now received the impugned demand notice, dated 12.03.2024, wherein the petitioner has been called upon to pay the disputed tax amount of Rs.50,11,324/-.

4. Under similar circumstances, the Court has come to the rescue of a person, like the petitioner by quashing the assessment order on terms subject to the payment of 25% of the disputed tax. I see no reason to take a different view in the facts and circumstances of the case.

5. Therefore, this Writ Petition is disposed of, by quashing the impugned order on terms, subject to the petitioner depositing 25% of the disputed tax with the respondent in cash from the Electronic Cash Register, within a period of 30 days from the date of receipt of a copy of this order.

6. The petitioner shall file a reply to the show cause notice that preceded the impugned order within such time. The impugned order, dated 12.12.2023, which stands quashed, shall be treated as addendum to the show cause notice. The respondent shall endeavour to pass a fresh order on merits as expeditiously as possible after hearing the petitioner. Needless to state, the petitioner shall be heard.

7. It is also made clear that in case the petitioner fails to comply with any of the conditions stipulated above, it will be deemed as if the Writ Petition was dismissed. In this case, it is open for the respondent to proceed to recover the amount from the petitioner in accordance with the provisions of the respective GST enactments and the Rules made thereunder. No costs. Consequently, connected Miscellaneous Petitions are dismissed.