Summary: In the case of M/s. Murgan Metals v. State Tax Officer (ST) [W.P. No. 16582 of 2024], the Madras High Court set aside an assessment order due to the failure to provide the Assessee a reasonable opportunity to contest a tax demand. The Assessee had inadvertently selected the wrong column while filing the annual return, leading to a tax demand. Despite submitting relevant documents, including FORM GSTR-3B and a comparison statement, the State Tax Officer did not consider these before confirming the tax proposal. The Assessee’s subsequent non-participation in proceedings and failure to file a reconciliation statement further complicated the case. The Court ruled that the assessment order be reconsidered on the condition that the Assessee pays 5% of the disputed tax within two weeks and is allowed to submit additional documents. The Tax Officer was instructed to provide a reasonable opportunity for a personal hearing and issue a fresh order within three months. The case highlights the importance of fair procedure in tax assessments.
The Hon’ble Madras High Court in M/s. Murgan Metals v. State Tax Officer (ST) [Writ Petition No. 16582 of 2024 dated June 25, 2024], set aside the Assessment Order and held that the Assessee was required to be provided reasonable opportunity to contest tax demand on merits. The Petitioner also failed to subsequently participate in proceedings or file reconciliation statement in FORM GSTR 9C. In these circumstances, while reconsideration is necessary, it is also necessary to put the Petitioner on terms. The Impugned Order was to be set aside on condition that Assessee remits 5 per cent of disputed tax demand and was to be provided an opportunity to submit additional documents, if any.
Facts:
M/s. Murgan Metals (“the Petitioner”), had duly reported both inward and outward supply in the FORM GSTR 3B and the FORM GSTR 1 returns. However, an inadvertent error occurred while filing the annual return, where Column 6[D] was selected instead of Column 6[B], which lead to the tax demand.
An order dated December 28, 2023 (“the Impugned Order”) passed by the State Tax Officer (“the Respondent”).
However, the Petitioner remained unaware of the Impugned Order until a bank attachment notice dated January 11, 2024, was served. Despite submitting a reply dated January 11, 2023, which included the FORM GSTR-3B returns and a comparison statement between FORM GSTR-2A and FORM GSTR-3B, the Respondent failed to consider these documents and confirmed the tax proposal. Additionally, the Petitioner did not participate in further proceedings or file the required reconciliation statement in FORM GSTR-9C.
Hence, aggrieved by the Impugned Order, the Petitioner filed present writ petition on the ground that he was not provided a reasonable opportunity to contest the tax demand on basis of merits.
Issue:
Whether the Assessing Officer must provide a reasonable opportunity of persona hearing to Assessee?
Held:
The Hon’ble Madras High Court in Writ Petition No. 16582 of 2024 held as under:
- Noted that, the Petitioner’s reply dated January 11, 2023 indicated that the FORM GSTR 3B returns for assessment period 2017-18 along with a comparison statement between the FORM GSTR 2A and the FORM GSTR 3B returns were annexed. However, the assessing officer did not take notes of these documents while confirming the tax proposal. However, the Petitioner also failed to subsequently participate in proceedings or file the reconciliation statement in FORM GSTR 9C. In these circumstances, while reconsideration is necessary, it is also necessary to put the Petitioner on terms.
- Opined that, the Impugned Order was set aside, on the condition that the Petitioner remits 5% of the disputed tax demand within two weeks from the date of receiving the order. The Petitioner was also permitted to submit additional documents within this period.
- Held that, the Respondent must provide a reasonable opportunity to the Petitioner and thereafter, issue a fresh order within three months. Hence, the writ petition is disposed of without any order or costs.
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