Case Law Details
Ravi Chitra Vs Assistant Commissioner (ST) (Madras High Court)
The Madras High Court recently delivered a significant ruling in the case of Ravi Chitra Vs Assistant Commissioner (ST) concerning GST liability. The case revolves around allegations of improper Input Tax Credit (ITC) claim and the subsequent demand raised by the tax authorities. The petitioner, Ravi Chitra, received a show cause notice alleging wrongful ITC availing for the tax period 2019-20. Despite submitting original tax invoices, bank statements, ledger accounts, and relevant returns, the impugned order confirming the tax proposal was issued citing absence of proof of goods movement.
The petitioner contended that they were unaware of the order due to reliance on a tax consultant for GST compliance. The court noted multiple reminders for personal hearings were issued post the petitioner’s reply, none of which led to submission of goods movement proofs like e-way bills or weighment slips.
The High Court, after detailed consideration, set aside the order dated 30.08.2023, granting the petitioner a second chance to contest the tax claim. A condition of remitting 20% of the disputed tax demand within two weeks was imposed, along with permission to submit additional documents proving goods movement.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
An order dated 30.08.2023 is assailed on the ground that the petitioner did not have a reasonable opportunity to contest the tax demand on merits.
2. In respect of the tax period 2019-20, the petitioner received a show cause notice dated 06.06.2022 alleging that the petitioner had wrongly availed of Input Tax Credit (ITC). Such show cause notice was replied to on 06.04.2023 by contending that the transaction was genuine. In support of such statement, the petitioner annexed the original tax invoices, bank statement, ledger account and relevant returns of the supplier and the petitioner. The impugned order was issued thereafter on 30.08.2023.
3. Learned counsel for the petitioner submits that the petitioner was unaware of the issuance of the impugned order because GST compliances were being taken care of by her tax consultant. It is further stated that such order came to the notice of the petitioner only upon receipt of an order of attachment dated 18.03.2024 in relation to the bank account of the petitioner.
4. Learned counsel for the petitioner seeks another opportunity for the petitioner to place all relevant documents on record and contest the tax claim on merits. On instructions, he submits that the petitioner agrees to remit 20% of the disputed tax demand as a condition for remand.
5. Mr. V. Prasanth Kiran, learned Government Advocate, accepts notice for the 1st respondent. By drawing reference to the impugned order, learned counsel points out that three reminders for personal hearing were issued to the petitioner. He also submits that all the three dates of personal hearing were subsequent to the petitioner’s reply dated 03.04.2023. As regards the petitioner’s reply, he submits that the petitioner did not submit any documents to establish actual movement of goods.
6. On perusal of the petitioner’s reply, it appears that the petitioner submitted original tax invoices, the ledger account pertaining to the supplier concerned, bank statement and relevant GSTR returns. The petitioner does not appear to have submitted e-way bills, lorry receipts, weighment slips and the like to establish actual movement of goods. On examining the impugned order, it appears that the tax proposal was confirmed largely on the ground that there was no proof of actual movement of goods. By taking into account the nature of documents submitted by the petitioner, which include the bank statement showing payments made to the supplier, the GSTR 2A indicating the availability of ITC, it is just and appropriate that the petitioner be provided an opportunity to produce relevant documents to prove actual movement of goods. As a condition for remand, however, it is also necessary to put the petitioner on terms.
7. In the facts and circumstances outlined above, the impugned order dated 30.08.2023 is set aside and the matter is remanded for reconsideration on condition that the petitioner remits 20% of the disputed tax demand as agreed to within a period of two weeks from the date of receipt of a copy of this order. The petitioner is also permitted to submit additional documents within the aforesaid period to establish actual movement of goods. Upon receipt of additional documents from the petitioner and on being satisfied that 20% of the disputed tax demand was received, the 1st respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within two months from the date of additional documents from the petitioner. As a consequence of the impugned order being set aside, the order of attachment is raised.
8. W.P.No.16633 of 2024 is disposed on the above terms without any order as to costs. Consequently, W.M.P.Nos.18255, 18256 and 18257 of 2024 are closed.
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