Case Law Details
Sri Ragava Paper Vs Deputy Commissioner (ST) (Madras High Court)
In a significant development, the Madras High Court has directed the reconsideration of a GST order involving Sri Ragava Paper and unreported e-way bills. The court’s decision mandates a reassessment of the case on the condition that the petitioner, Sri Ragava Paper, remits an additional 5% of the disputed tax demand. This ruling underscores the importance of procedural fairness and the necessity for businesses to have adequate opportunities to contest tax demands.
The case revolves around two critical orders: an original order dated September 4, 2023, and an appellate order dated April 12, 2024. Sri Ragava Paper challenged these orders, arguing that they were not given a reasonable opportunity to contest the tax demand on its merits. The petitioner attributed the oversight to their accountant, who failed to inform them about the proceedings.
The petitioner’s counsel highlighted that due to the Covid-19 pandemic, the business was not operational, resulting in nil returns being filed. Upon discovering the original order, an appeal was promptly filed, which was subsequently rejected due to being filed after the limitation period. Despite this, Sri Ragava Paper showed their willingness to comply by paying 10% of the disputed tax at the time of filing the appeal and agreed to pay an additional 5% for a chance to have the case re-evaluated.
Representing the respondents, Mr. T. N. C. Kaushik, the learned Additional Government Pleader, confirmed that notices were issued to Sri Ragava Paper, including a notice in Form ASMT 10, a show cause notice, and a personal hearing notice. However, the petitioner did not respond to these notices, leading to the confirmation of the tax proposal.
Upon reviewing the impugned orders, the court noted that the orders were based on two e-way bills that were not reported in the GSTR 1 statements. Given the petitioner’s claim of being unaware of the proceedings, the court deemed it just to provide another opportunity for the petitioner to present their case. However, this was conditional upon the payment of an additional 5% of the disputed tax demand.
The court’s directive required the petitioner to remit this additional amount within two weeks and submit a reply to the show cause notice. Upon fulfilling these conditions, the second respondent is to offer a reasonable opportunity for a personal hearing and subsequently issue a fresh order within three months.
The Madras High Court’s decision to remand the GST case involving Sri Ragava Paper for reconsideration highlights the judicial emphasis on ensuring procedural fairness in tax disputes. The ruling provides a balanced approach by offering the petitioner another chance to contest the tax demand while also ensuring compliance through the additional pre-deposit condition. This case serves as a reminder for businesses to stay vigilant about their tax compliance processes and the importance of responding to tax authorities’ notices promptly.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
An order in original dated 04.09.2023 and an appellate order dated 12.04.2024 are assailed in this writ petition on the ground that the petitioner did not have a reasonable opportunity to contest the tax demand on merits. By stating that the petitioner entrusted GST compliances to an Accountant and that such Accountant did not inform the petitioner about proceedings, the present writ petition was filed.
2. Learned counsel for the petitioner submits that the petitioner did not carry on business during the Covid-19 pandemic period and, therefore, filed nil returns. After coming to know of the order in original, he submits that an appeal was filed before the first respondent. He points out that such appeal was rejected on the ground of limitation. He further submits that 10% of the disputed tax demand was paid at the time of presenting the appeal and the petitioner agrees to remit an additional 5% of the disputed tax demand as a condition for remand to the original authority.
3. Mr. T. N. C. Kaushik, learned Additional Government Pleader, accepts notice for the respondents. He points out that a notice in Form ASMT 10 dated 23.03.2023, a show cause notice dated 18.03.2023 and a personal hearing notice dated 27.03.2023 were issued to the petitioner.
4. On examining the impugned order, it is evident that such order relates to two e-way bills, which were not reported in the GSTR 1 statements. It is also clear that the tax proposal was confirmed because the petitioner did not reply to the show cause notice. In view of the assertion that the petitioner could not participate on account of not being aware of proceedings, the interest of justice warrants that an opportunity be provided to the petitioner, albeit by putting the petitioner on terms.
5. For reasons aforesaid, impugned orders dated 04.09.2023 and 12.04.2024 are set aside and the matter is remanded to the second respondent for re-consideration subject to the petitioner remitting an additional 5% of the disputed tax demand within a period of two weeks from the date of receipt of a copy of this order. Within the said period, the petitioner is permitted to submit a reply to the show cause notice. On receipt thereof and on being satisfied that an additional 5% of the disputed tax demand was received, the second 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. W.P.No.14724 of 2024 is disposed of on the above terms. No costs. Consequently, W.M.P.No.15965 of 2024 is closed.
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