GST liability confirmed without petitioner participation: Madras HC Remands Case for Reconsideration

Tristar Logistics Vs State Tax Officer (Madras High Court)

In the case of Tristar Logistics vs. State Tax Officer, the petitioner challenged an order dated 06.10.2023, which was issued without their knowledge until their bank, Standard Chartered Bank, notified them about it. The petitioner filed a writ petition on these grounds, asserting their inability to respond to the show cause notice or attend the personal hearing due to being unaware of the proceedings. They argued that while the notice and order were uploaded on the portal, they were not communicated through any other means. Furthermore, the petitioner’s bank account was attached, and the entire liability under the order, including tax and penalty, was appropriated from their bank account.

The learned counsel for the petitioner contended that the petitioner was not aware of the proceedings, including the show cause notice and personal hearing, and therefore could not participate in the process. On the other hand, Mr. V. Prashanth Kiran, learned Government Advocate representing respondents 1 & 2, accepted notice and pointed out that the intimation was issued to the petitioner in August 2023, with the show cause notice being issued on 16.08.2023. He also mentioned that a personal hearing was provided in September 2023 before the impugned order was issued.

Upon perusal of the impugned order, it was observed that the tax liability arose from a discrepancy between the GSTR 3B and GSTR 1 returns, and the tax proposal was confirmed without the participation of the petitioner. Additionally, the entire tax liability was realized by appropriating the amount from the petitioner’s bank account, ensuring that revenue interest was fully secured. In light of these circumstances, it was deemed just and appropriate to provide the petitioner with an opportunity to contest the tax demand on merits.

Consequently, the impugned order dated 06.10.2023 was set aside, and the matter was remanded for reconsideration. The petitioner was permitted to submit a reply within two weeks from the date of receipt of the order. Upon receipt of the reply, the 1st respondent was directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within three months from the date of receipt of the petitioner’s reply. It was clarified that any amounts appropriated from the petitioner’s bank account would abide by the outcome of the remanded proceedings.

The writ petition was disposed of on the above terms without any order as to costs, and connected miscellaneous petitions were closed.

FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT

An order dated 06.10.2023 is the subject of challenge in this writ petition.

2. The petitioner asserts that he was unaware of proceedings culminating in the impugned order until his bank, Standard Chartered Bank, informed him about the order. The present writ petition was filed in the said facts and circumstances.

3. Learned counsel for the petitioner submits that the petitioner was unable to respond to the show cause notice or attend the personal hearing on account of being unaware of the same. He points out that such notice and order were uploaded on the portal but not communicated to the petitioner through any other mode. He points out that pursuant to the impugned order, the bank account of the petitioner was attached and the entire liability under the impugned order, including tax and penalty was appropriated from his bank account.

4. Mr. V. Prashanth Kiran, learned Government Advocate, accepts notice for respondents 1 & 2. He points out that the intimation was issued to the petitioner in August 2023 and that the show cause notice was issued on 16.08.2023. He also points out that a personal hearing was provided in September 2023 before the impugned order was issued.

5. On perusal of the impugned order, it appears that the tax liability pertains to the discrepancy between the GSTR 3B and GSTR 1 returns. It is also evident that the tax proposal was confirmed without the participation of the petitioner. At this juncture, the entire tax liability has been realised by appropriating the amount from the petitioner’s bank account. As such, revenue interest stands fully secured. In these circumstances, it is just and appropriate that an opportunity be provided to the petitioner to contest the tax demand on merits.

6. Solely for reasons set out above, the impugned order dated 06.10.2023 is set aside and the matter is remanded for reconsideration. The petitioner is permitted to submit a reply within two weeks from the date of receipt of a copy of this order. Upon receipt thereof, the 1st 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. For the avoidance of doubt, it is made clear that amounts appropriated from the petitioner’s bank account shall abide by the outcome of the remanded proceedings.

7. The writ petition is disposed of on the above terms without any order as to costs. Consequently, connected miscellaneous petitions are closed.