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Case Law Details

Case Name : Kamatchi Stores Vs Deputy State Tax Officer-1 (Madras High Court)
Appeal Number : W.P.No.7850 of 2024
Date of Judgement/Order : 25/03/2024
Related Assessment Year :
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Kamatchi Stores Vs Deputy State Tax Officer-1 (Madras High Court)

In a recent case between Kamatchi Stores and the Deputy State Tax Officer-1, the Madras High Court delivered a significant judgment regarding discrepancies in GSTR 3B and GSTR 2B returns. The petitioner challenged an assessment order and subsequent recovery notices issued without hearing the taxpayer. Let’s delve into the details of the case and the court’s decision.

Detailed Analysis

Kamatchi Stores, engaged in trading provisions and vegetables, received a show cause notice on 06.03.2023, citing discrepancies in their GST returns. However, due to inadequate communication from their GST consultant, the petitioner couldn’t respond, leading to the issuance of the assessment order without a hearing.

The petitioner, upon noticing the confirmed tax liability and the appropriation of a significant sum from their bank account, sought another opportunity to present their case. The court observed that although the petitioner had been given previous opportunities for a hearing, the lack of communication from their consultant warranted reconsideration.

Examining the records, including the petitioner’s bank statement showing debits towards tax liability, the court concluded that the assessment order lacked due process. Hence, the court set aside the order and remanded the matter for reconsideration. The petitioner was granted 15 days to submit a reply to the show cause notice, with the respondent directed to provide a fresh order within two months after receiving the reply.

Conclusion

The judgment of the Madras High Court in the case of Kamatchi Stores vs Deputy State Tax Officer-1 highlights the importance of procedural fairness in tax assessments. Despite previous opportunities, the court recognized the petitioner’s right to be heard and ordered a fresh consideration of the case. This decision underscores the significance of due process in tax proceedings, ensuring fairness and equity for taxpayers.

FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT

An assessment order dated 07.06.2023 and the consequential recovery notices and attachment orders are the subject of challenge.

2. The petitioner carries on the business of trading in provisions, vegetables and the like. A show cause notice was issued to the petitioner on 06.03.2023 calling upon the petitioner to show cause in respect of discrepancies between the GSTR 3B return and the GSTR 2B return. The petitioner did not reply thereto because he had engaged the services of a GST consultant, who did not keep the petitioner informed. The impugned assessment order was issued in the said facts and circumstances without hearing the petitioner. Thereafter, a recovery notice was issued on 18.12.2023 and a sum of about Rs.5,39,000/- was appropriated from the petitioner’s bank account. The present writ petition was filed in the said facts and circumstances.

3. Learned counsel for the petitioner invited my attention to the impugned order and pointed out that the confirmed tax liability was Rs.10,89,028/-. As against this sum, he submits that a sum of about Rs.5,39,000/- was appropriated from the petitioner’s account in the State Bank of India. He refers to the statement of account to corroborate such contention. Since the petitioner was not heard before issuing the impugned order, he seeks another opportunity and also points out that the petitioner had submitted a reply on 08.03.2024.

4. Mrs. K. Vasanthamala, learned Government Advocate, accepts notice for the respondent. By referring to the impugned order, she points out that such order was preceded by an intimation dated 18.05.2022 and a show cause notice dated 06.03.2023 and a personal hearing/reminder notice dated 08.05.2023. Since several opportunities were provided to the petitioner, she submits that no interference is called for.

5. The documents on record include the statement of account of the petitioner in the State Bank of India. The said statement of account indicates that debits were made towards the tax liability on 10.01.2024 and 30.01.2024. The aggregate value of such debits is about Rs.5,39,000/-. On perusal of the impugned assessment order, it is evident that the tax liability is Rs.10,89,028/- and interest and penalty was levied in respect thereof. By taking into account the fact that about 50% of the tax liability was recovered by making an appropriation from the petitioner’s bank account, it is just and necessary to provide the petitioner an opportunity of being heard. Solely for that reason, the impugned order calls for interference.

6. Therefore, the impugned order dated 07.06.2023 is set aside and the matter is remanded for reconsideration. The petitioner is permitted to submit a reply to the show cause notice within a period of 15 days from the date of receipt of a copy of this order by annexing all relevant documents. 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 two months from the date of receipt of the petitioner’s reply. In view of the assessment order being quashed, the bank attachment stands raised.

7. The writ petition is disposed of on the above terms. There will be no order as to costs. Consequently, connected miscellaneous petitions are closed.

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