R A Metal Finishers Private Limited Vs State Tax Officer (Madras High Court)
Madras High Court ruled in favor of R A Metal Finishers Pvt. Ltd., setting aside a GST demand order issued by the State Tax Officer. The petitioner challenged the demand, arguing that it was issued without considering their response and supporting reconciliation report. The dispute arose over a mismatch between the petitioner’s GSTR-2A and GSTR-3B returns for the tax period April 2019 to March 2020. The authorities directly issued a show-cause notice without first sending an intimation in Form GST ASMT-10, and after receiving the petitioner’s response, rejected it with a one-line order without explanation.
The petitioner contended that they had sufficient input tax credit balance and had duly responded to the show-cause notice by submitting a detailed reconciliation report. This report demonstrated an excess credit of ₹1,40,684 after adjusting for IGST, CGST, and SGST. However, the tax officer failed to consider this explanation and proceeded with confirming the demand of ₹7,25,094, including interest under Section 50 of the Tamil Nadu GST Act, 2017. The court found that this approach violated principles of natural justice, as the authorities did not provide any reasoning for rejecting the petitioner’s reply.
