S. P. Mani and Mohan Diary (India) Pvt Ltd Vs Assistant Commissioner (ST) (FAC) (Inspection) (Madras High Court)
Madras High Court held that allegation of suppression of sale based on consumption of power not sustained since EB units consumed are not directly linked with sales and reasons for difference in turnover duly explained.
Facts- The petitioner has been issued with show cause notice dated 02.03.2024 notifying 10 defects, the petitioner, on receipt of the said show cause notice, filed replies dated 04.01.2024 and 13.02.2024 in the GST Portal, answering to each defects, based on which, the respondent passed Assessment Orders dated 25.06.2024, u/s. 74 of the TNGST Act, whereby, proposals to recover tax with regard to 7 defects were dropped, and in respect of two defects, which were accepted by the petitioner and tax was paid, penalty alone was imposed, however, so far as one defect is concerned, viz., defect No.8, the respondent erroneously confirmed the demand on the alleged outward suppression of taxable turnover along with interest and equal amount of penalty. Aggrieved against which, the petitioner has filed the present Writ Petitions.
Conclusion- There is no dispute on the aspect that during the year 2020, Covid-19 was at peak, during which period, there was complete shut down. The petitioner is engaged in the business of manufacture/sale of milk and milk allied products. Due to Covid-19 lock down restrictions, the petitioner could not run the business successfully as they did before, which resulted in the goods being stagnated in the godowns, and that since the petitioner is carrying out the manufacturing process as a Job Worker, the final products manufactured for the third party has to be stored in the deep freezer facility installed in the petitioner’s business premises till the final products are supplied to the principal suppliers, viz., Co-operatives Societies, i.e. for 200 MT under (-20 degree Celsius) for which purpose, the petitioner has to run the plant for 24 hours for storage of the goods under -20 degree Celsius, which contributed to the excess consumption of electricity, and despite the fact that the said aspect was answered by the petitioner in the form of reply, clearly stating that EB units consumed are not directly linked with the sales of the petitioner and also explained the reason for the difference in turnover during the period subject period with supporting documents, the respondent failed to consider the said vital aspect and passed the impugned orders.
