Case Law Details
Chettiar Stores Vs Deputy State Tax (Madras High Court)
Opportunity of a personal hearing is required to be provided even when the Assessee did not check the GST portal after the cancellation of the GST registration
The Hon’ble Madras High Court in the case of Chettiar Stores v. Deputy State Tax Officer [W.P. No. 6319 of 2024 dated March 13, 2024] quashed the disputed order wherein the Assessee’s GST registration was canceled and did not check the GST portal because Assessee was not acquainted with GST Portal. The Assessee was allowed to reply to the Show Cause Notice and an opportunity of personal hearing was granted.
Facts:
Chettiar Stores (“the Petitioner”) was a registered person engaged in the business of retail and wholesale trading of wheat, rye flour, corn flour and other cereals.
The Petitioner’s GST registration was cancelled with effect from April 01, 2020. Consequently, the Petitioner asserted that she was not accessing the GST portal. Pursuant to the Show Cause Notice dated July 06, 2023 (“the SCN”), an Order was passed on August 22, 2023 (“the Impugned Order”).
The Petitioner contended that they did not have access to the GST portal and were, in any event, not acquainted with the use of computer resources. The proceedings were not preceded by a notice in GST FORM ASMT-10. Thereafter, the Petitioner agreed to remit 10% of the disputed tax demand as a condition for re-consideration.
However, the Deputy State Tax Officer (“the Respondent”) pointed out that the Petitioner was provided multiple opportunities and that this is evident in examining the Impugned Order. He also submitted that the Petitioner received multiple notices after the cancellation of the GST registration and that it is not tenable to contend that the Petitioner did not have access to the GST portal.
Hence, aggrieved by the circumstances, the Petitioner filed the present writ petition before the Hon’ble Court.
Issue:
Whether opportunity of a personal hearing is required to be provided even when the Assessee did not check the GST portal after the cancellation of the GST registration?
Held:
The Hon’ble Madras High Court in W.P. No. 6319 of 2024 held as under:
- Directed that, subject to the receipt of the Petitioner’s reply and upon being satisfied that 10% of the disputed tax demand was received, the Respondent was directed to provide a reasonable opportunity to the Petitioner, including a personal hearing, and thereafter issue a fresh assessment order within a period of two months
- Held that, the Petitioner should be provided an opportunity to contest the tax demand. Solely for this reason, the Impugned Order was quashed subject to the condition that the Petitioner remits 10% of the disputed tax demand within a period of two weeks from the date of receipt of a copy of this order. The Petitioner was also permitted to submit a reply to the SCN within the aforementioned period. Hence, the writ was disposed of.
Our Comments:
Section 29 of the CGST Act talks about “Cancellation or suspension of registration”. According to Section 29(2) of the CGST Act, the proper officer may cancel the registration of a person from such date, including any retrospective date, as he may deem fit, where:
1. a registered person has contravened such provisions of the Act or the Rules made thereunder as may be prescribed; or
2. a person paying tax under Section 10has not furnished, or
3. any registered person, other than a person specified in clause (b),has not furnished returns for, or
4. any person who has taken voluntary registration under sub-section (3) of Section 25has not commenced business within six months from the date of registration; or
5. registration has been obtained by means of fraud, wilful misstatement, or suppression of facts.
However, the proviso to Section 29(2) of the CGST Act, the proper officer shall not cancel the registration without giving the person an opportunity of being heard.
Similarly, in the case of the Hon’ble Gujarat High Court in the case of Sohilbhai Sddiqbhai Aadmani vs. Superintendent, Central Goods and Service Tax [R/Special Civil Application No. 2409 of 2023 dated July 28, 2023] wherein an opportunity of being heard in person was also not given to the petitioner. Therefore, show cause notice and order cancelling registration were to be set aside and respondent authority was to be directed to restore the registration of the petitioner.
It is recommended to regularly keep a check on the GST Portal. As per the GST FAQs, the Assessee can login to the GST Portal even after suo moto cancellation of registration.
Therefore, an opportunity of being heard is necessary before cancellation but the Assessee should also regularly check the GST Portal.
Conclusion: The Madras High Court’s ruling in Chettiar Stores v. Deputy State Tax Officer underscores the necessity of procedural fairness in tax administration. It reaffirms that the right to a personal hearing is integral to the principles of natural justice, regardless of the taxpayer’s engagement with digital platforms. This judgment serves as a crucial reminder for tax authorities to ensure compliance with procedural requirements, thereby upholding the rights of taxpayers.
Regular monitoring of the GST portal remains advisable for Assessees to stay informed about their tax obligations and avoid similar disputes. However, this ruling provides a safeguard for those who may inadvertently miss critical updates due to unfamiliarity with digital resources.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
An assessment order dated 22.08.2023 is the subject of challenge in the writ petition. The petitioner was a registered person engaged in the business of retail and wholesale trading of wheat, rye flour, corn flour and other cereals. The petitioner’s GST registration was cancelled with effect from 01.04.2020. Consequently, the petitioner asserts that she was not accessing the GST portal. Pursuant to a show cause notice dated 06.07.2023, the impugned order was issued on 22.08.2023.
2. Learned counsel for the petitioner contends that the petitioner did not have access to the GST portal and was, in any event, not acquainted with the use of computer resources. She also submits that the impugned proceedings were not preceded by a notice in Form ASMT-10. On instructions, learned counsel submits that the petitioner agrees to remit 10% of the disputed tax demand as a condition for re-consideration.
3. Mr. V. Prasanth Kiran, learned Government Advocate, accepts notice for the respondent. He points out that the petitioner was provided multiple opportunities and that this is evident on examining the impugned order. He also submits that the petitioner received multiple notices after the cancellation of the GST registration and that it is not tenable to contend that the petitioner did not have access to the GST portal.
4. The admitted position is that the petitioner’s GST registration was cancelled. As a consequence, at a minimum, the petitioner had little reason to monitor the GST portal. The assessment order indicates clearly that the petitioner was not heard although it appears that personal hearings were offered to the petitioner. The petitioner also agreed to remit 10% of the disputed tax demand as a condition for remand.
5. In these circumstances, I am of the view that the petitioner should be provided an opportunity to contest the tax demand. Solely for this reason, the impugned assessment order is quashed subject to the condition that the petitioner remits 10% of the disputed tax demand within a period of two weeks from the date of receipt of a copy of this order. The petitioner is also permitted to submit a reply to the show cause notice dated 06.07.2023 within the aforementioned period. Subject to the receipt of the petitioner’s reply and upon being satisfied that 10% of the disputed tax demand was received, the assessing officer is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh assessment order within a period of two months. costs.
6. W.P.No.6319 of 2024 is disposed of on the above terms. No costs. Consequently, W.M.P.Nos.7022 and 7024 of 2024 are closed.
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