Case Law Details
Vijayalakshmi Supplyer Vs State Tax Officer (Madras High Court)
The order under GST law must offer a personal hearing if requested or if adverse tax proposals are made. Failure to do so invalidates the order.
Introduction: In the case of Vijayalakshmi Supplier Vs State Tax Officer, the Madras High Court scrutinized the procedural adherence in GST demand orders, emphasizing the necessity of granting a personal hearing. The court’s decision to set aside the order underlines the importance of statutory compliance, ensuring taxpayers’ rights are protected.
Detailed Analysis:
Background: The petitioner, Vijayalakshmi Supplier, faced allegations of under-declaring output tax and claiming excess Input Tax Credit (ITC). A show-cause notice was issued on 27.12.2023, citing these defects. The petitioner responded on 16.02.2024, clarifying the turnover discrepancy due to an inadvertent duplication of a bill and asserting that only eligible ITC was claimed for building materials.
Petitioner’s Argument: The petitioner contended that the GST demand order dated 22.04.2024 was issued without offering a personal hearing, which is a mandatory requirement under sub-section (4) of Section 75 of the applicable GST enactments. The petitioner argued that this procedural lapse rendered the order invalid.
Respondent’s Argument: The Additional Government Pleader, T.N.C. Kaushik, representing the State Tax Officer, acknowledged that the petitioner’s reply was considered. However, he asserted that the petitioner had opted out of a personal hearing in their reply dated 16.02.2024.
Court’s Findings: The court highlighted that as per Section 75(4) of the GST Act, a personal hearing must be provided if requested or if an adverse order is to be issued. In this case, since the order confirmed the tax proposals adversely affecting the petitioner, a personal hearing was mandatory. The court noted the failure to offer this hearing as a significant infraction of the statutory requirement.
Judgment: The Madras High Court set aside the impugned order dated 22.04.2024 due to the procedural lapse. The case was remanded for reconsideration, directing the respondent to offer the petitioner a reasonable opportunity for a personal hearing and to issue a fresh order within three months after receiving the petitioner’s additional reply.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
An order in original dated 22.04.2024 is challenged on the ground that a personal hearing was not offered to the petitioner.
2. By issuing show cause notice dated 27.12.2023, proceedings were initiated against the petitioner in respect of two defects. The said defects were under declaration of output tax and excess claim of Input Tax Credit (ITC). By reply dated 16.02.2024, the petitioner stated that the turnover for March 2019 was inadvertently reported as Rs.99,77,487/- instead of Rs.67,34,525/- because one bill was inadvertently reported twice. The petitioner also stated that the correct turnover was reported in the GSTR 3B return and that the mistake was rectified in April 2019. The petitioner also replied with regard to availment of ITC by stating that only eligible ITC was availed of in respect of building materials. The impugned order was issued in these facts and circumstances.
3. Learned counsel for the petitioner submits that no personal hearing 2/6 offered and that the impugned order was issued by referring to the petitioner’s reply.
4. Mr. T.N.C.Kaushik, learned Additional Government Pleader, accepts notice for the respondent. He submits that the petitioner’s reply was taken into consideration and that the petitioner opted out of the personal hearing in reply dated 16.02.2024.
5. As per sub-section (4) of Section 75 of applicable GST enactments, a personal hearing is required to be provided either if requested for or if an order adverse to the tax payer is proposed to be issued. By the impugned order, both the tax proposals were confirmed. In these circumstances, a personal hearing should have been offered to the petitioner. On account of infraction of a mandatory statutory prescription, the impugned order cannot be sustained.
6. For reasons set out above, the impugned order dated 22.04.2024 is set aside and the matter is remanded for reconsideration. The petitioner is permitted to submit an additional reply along with documents, if any, within a period of two weeks from the date of receipt of a copy of this order. Upon receipt thereof, the respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within a period of three months from the date of receipt of the petitioner’s reply.
7. The writ petition is disposed of on the above terms without any order as to costs. Consequently, connected miscellaneous petitions are closed.
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