Case Law Details
Brakes India Private Limited Vs Assistant Commissioner (ST) (Madras High Court)
Introduction: This article examines the case of Brakes India Private Limited vs. Assistant Commissioner (ST), where the Madras High Court, in an order dated 30.10.2023, deemed a GST notice invalid. The petitioner asserted that a show cause notice fixing a personal hearing within two hours of receiving the email deprived them of a reasonable opportunity to present relevant documents and explanations.
Detailed Analysis:
1. Background of the Writ Petition: Brakes India Private Limited, a registered entity under the current GST regime, challenged the assessment order dated 30.10.2023. The dispute arose from a notice proposing to block Input Tax Credit (ITC) under Rule 86-A of the TNGST/CGST Rules, 2017, regarding purchases from M/s. Quality Traders.
2. Chronology of Notices:
- Initial notice dated 14.02.2023 proposing to block ITC.
- Respondent issued a show cause notice dated 09.10.2023.
- Petitioner claimed the show cause notice was served via email on 25.10.2023, fixing a personal hearing on the same day at 02.00 pm.
3. Petitioner’s Contentions:
- Lack of reasonable opportunity: The petitioner argued that the short notice for a personal hearing within two hours of receiving the email did not allow them sufficient time to submit relevant documents and explain the circumstances.
- Violation of principles of natural justice: The petitioner claimed that the limited timeframe violated the principles of natural justice, impacting their right to a fair hearing.
4. Government Pleader’s Response: The learned Additional Government Pleader argued that the show cause notice was dispatched by registered post with acknowledgment due, providing a reasonable opportunity.
5. Court’s Decision and Directives:
- Limited Opportunity: The court, without expressing any opinion on the merits, intervened based on the inadequate time provided for a personal hearing, considering the substantial value involved in reversing ITC.
- Order Quashed: The impugned order dated 30.10.2023 was quashed, and the matter was remanded for reconsideration.
- Court’s Directives: The respondent was directed to provide a reasonable opportunity, including a personal hearing, and dispose of the matter by a reasoned order. The petitioner was instructed to submit relevant documents by 24.01.2024.
Conclusion: The Madras High Court’s decision in favor of Brakes India Private Limited highlights the importance of providing a reasonable opportunity to taxpayers in GST assessments. The court’s intervention emphasizes adherence to principles of natural justice, ensuring a fair and just procedure in tax proceedings. The directives for reconsideration underscore the significance of a thorough and just determination in matters of substantial financial impact.
This case serves as a notable precedent, emphasizing the need for procedural fairness and adequate time for representation in tax matters, contributing to the overall principles of justice in tax administration.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
This writ petition is directed against the order dated 30.10.2023 in respect of the assessment year 2019 – 2020. The petitioner states that it is a registered person under the current GST regime. The respondent initially issued a notice dated 14.02.2023 proposing to block the petitioner’s Input Tax Credit (ITC) under Rule 86-A of the TNGST / CGST Rules, 2017 in respect of purchases made from M/s. Quality Traders on the ground that they are not in existence or ill traders. A reply was issued to such notice on the same date. Thereafter, it is stated that the respondent issued show cause notice dated 09.10.2023. The petitioner asserts that the said show cause notice was served on the petitioner by e-mail on 25.10.2023. The show cause notice fixed the personal hearing on the same date at 02.00 pm, i.e. within two hours from the time of receipt of e-mail. Consequently, the petitioner contends that a reasonable opportunity was not provided to the petitioner to submit relevant documents and, more importantly, explain the facts and circumstances. The present writ petition was filed in the said facts and circumstances.
2. Mr.C.Harsha Raj, learned Additional Government Pleader, accepts notice on behalf of the respondent. He submits that the show cause notice dated 09.10.2023 was despatched to the petitioner by registered post with acknowledgment due. Therefore, he submits that the petitioner was provided a reasonable opportunity and that no case is made out for interference.
3. As a consequence of the impugned order, the petitioner has been directed to reverse ITC of a substantial value. Such action has been taken pursuant to a show cause notice dated 09.10.2023, which the petitioner asserts was received on the date of hearing. These facts reveal that a reasonable opportunity was not provided to the petitioner to submit necessary documents and provide an explanation to the respondent. On this limited ground, albeit without expressing any opinion on the merits in the matter, the impugned order calls for interference.
4. Accordingly, W.P.No.36439 of 2023 is allowed by quashing the impugned order dated 30.10.2023 and remanding the matter for re-consideration. The respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and dispose of the matter by a reasoned order. The petitioner shall provide all relevant documents to the respondent on or before 24.01.2024. Upon receipt thereof, after providing a personal hearing, a reasoned order shall be issued within a period of four weeks from the date of receipt of the documents. There shall be no order as to costs. Consequently, W.M.P.Nos.36451, 36452 of 2023 are closed.
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