Case Law Details
Tvl. Bashir Maligai Stores Vs Deputy State Tax (Madras High Court)
In a recent legal development, an order dated December 31, 2023, was challenged through a writ petition. The petitioner contends that the tax demand raised was unjust as he was not given a reasonable opportunity to contest the demand on its merits. This article examines the circumstances surrounding the case, the arguments presented, and the court’s decision to remand the case for reconsideration.
Background of the Case
The petitioner, whose GST registration was canceled by an order dated October 21, 2020, with effect from December 31, 2017, argues that he had no reason to monitor the GST portal post-cancellation. This lack of monitoring led to the petitioner being unaware of any ongoing proceedings, which is why the present writ petition was filed.
Petitioner’s Arguments
The petitioner’s counsel argued that the petitioner did not receive any notice in Form ASMT 10 or any other intimation regarding the tax demand. The primary reason for this was the cancellation of the GST registration, which led to the petitioner not monitoring the GST portal. This lack of notice, the counsel contended, violated the principles of natural justice, as the petitioner was not given an adequate opportunity to defend against the tax demand.
Respondent’s Stand
The respondent, represented by learned Additional Government Pleader Mr. C. Harsha Raj, countered that the impugned order did indeed refer to a notice in Form ASMT 10 and a show cause notice dated September 29, 2023. He argued that these references indicated that the principles of natural justice were followed and that the petitioner was duly notified of the discrepancies in returns.
Court’s Observations
The court took into consideration the evidence that the petitioner’s GST registration was canceled in October 2020, effective from December 2017. The court acknowledged that the petitioner’s claim of not monitoring the GST portal had merit due to this cancellation. However, it was also noted that the petitioner was notified of discrepancies via Form ASMT 10.
Court’s Decision
In light of the presented facts and arguments, the court found it just and necessary to grant the petitioner an opportunity to contest the tax demand on its merits. The court proposed a condition where the petitioner agreed to remit 10% of the disputed tax demand as a precondition for remand.
Conditions for Remand
The court set aside the impugned order dated December 31, 2023, and remanded the matter for reconsideration. The conditions set by the court were as follows:
1. The petitioner must remit 10% of the disputed tax demand within three weeks from the date of receipt of the court’s order.
2. The petitioner is allowed to submit a reply to the show cause notice within the same three-week period.
3. Upon receiving the petitioner’s reply and confirmation of the 10% payment, the respondent must provide a reasonable opportunity for a personal hearing.
4. The respondent is directed to issue a fresh order within three months from the date of receipt of the petitioner’s reply.
The court disposed of the writ petition based on these terms and did not pass any order regarding costs. Additionally, any connected miscellaneous petitions were closed.
Conclusion: This case highlights the importance of due process and the principles of natural justice in tax-related proceedings. The court’s decision to remand the case underscores the necessity for taxpayers to be adequately notified and given a fair chance to present their case. By allowing the petitioner to contest the tax demand on merits, albeit under specific conditions, the court ensures a balanced approach that upholds both legal compliance and the rights of the taxpayer.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
An order in original dated 31.12.2023 is challenged in this writ petition on the ground that the petitioner did not have a reasonable opportunity to contest the tax demand on merits. The petitioner states that his GST registration was cancelled by order dated 21.10.2020 with effect from 31.12.2017. Consequently, he states that he had no reason to monitor the GST portal. The present writ petition was filed in such circumstances.
2. Learned counsel for the petitioner submits that the petitioner did not receive notice in Form ASMT 10 or an intimation. He further submits that the petitioner was unaware of proceedings because his GST registration was cancelled in 2020.
3. Mr. C. Harsha Raj, learned Additional Government Pleader, accepts notice for the respondent. By referring to the impugned order, he points out that such order refers to a notice in Form ASMT 10 and to the show cause notice dated 29.09.2023. Therefore, he contends that principles of natural justice were complied with.
4. The petitioner has placed on record evidence that his GST registration was cancelled on 21.10.2020 with effect from 31.12.2017. In those circumstances, the submission that the petitioner was not monitoring the portal is not entirely devoid of merits. At the same time, it is noticeable that the petitioner was put on notice about the discrepancies in returns by issuing notice in Form ASMT 10. In these circumstances, it is just and necessary to provide an opportunity to the petitioner to contest the tax demand on merits, albeit by putting the petitioner on terms. On instructions, learned counsel for the petitioner submits that the petitioner is willing to remit 10% of the disputed tax demand as a condition for remand.
5. For reasons set above, the impugned order dated 31.12.2023 is set aside and the matter is remanded for reconsideration on condition that the petitioner remits 10% of the disputed tax demand as agreed to within a period of three weeks from the date of receipt of a copy of this order. The petitioner is permitted to submit a reply to the show cause notice within the aforesaid period. Upon receipt of the petitioner’s reply and upon being satisfied that 10% of the disputed tax demand was received, 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.
6. 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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