Case Law Details
Annalakshmi Stores Vs Deputy State Tax (Madras High Court)
In the case of Annalakshmi Stores vs. Deputy State Tax, Madras High Court addressed writ petitions challenging assessment orders under Section 63 of the Central Goods and Services Tax Act, 2017 (CGST Act) concerning specific assessment periods. The primary issue revolved around the cancellation of GST registration of Annalakshmi Stores with retrospective effect from 31st August 2017 due to non-filing of returns continuously for six months. The petitioner contended that they were unaware of the issuance of notices and show cause notices because these documents were uploaded using a temporary ID, which they did not have access to.
The petitioner’s counsel argued that under Section 63 and Rule 100 of the TNGST Rules, issuance of a show cause notice in Form GST ASMT-14 is mandatory for proceedings initiated under Section 63. They emphasized that uploading such notices on a temporary ID does not constitute proper service as per Section 169 of the GST enactments applicable. It was further highlighted that despite efforts to file statutory appeals against the tax demands, they were unable to do so due to the use of the temporary ID.
On behalf of the government, the learned Additional Government Pleader countered that the petitioner’s email ID and mobile number, as per their original GST registration, were used for the temporary ID. They argued that the petitioner had access to this temporary ID as the relevant password was communicated to the registered email and mobile number.
Examining the impugned orders, the Court noted that the tax liability had been computed on a best judgment basis, relying on auto-populated GSTR-2A data without giving the petitioner an opportunity to present their objections in person. Considering these circumstances, the Court found it just and necessary to afford the petitioner an opportunity to contest the tax proposals on merit.
As a resolution, the Court directed that the petitioner be provided with a chance to reply to the show cause notice within two weeks. It was also stipulated that the petitioner must remit 10% of the disputed tax demand for each assessment period, as previously agreed, within two weeks from receiving a copy of the court’s order. The court instructed that any application for refund of the remitted amount should be processed within 30 days.
Furthermore, the orders under challenge were set aside, and the matters were remanded for reconsideration by the Deputy State Tax Officer. The Deputy State Tax Officer was directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and issue fresh orders within three months from receiving the petitioner’s reply.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
Assessment orders under Section 63 of the Central Goods and Services Tax Act, 2017 (the CGST Act) in respect of specific assessment periods are assailed in these writ petitions.
2. The GST registration of the petitioner was cancelled on 08.02.2019 with retrospective effect from 31.08.2017 on the ground that the petitioner had not filed his returns continuously for a period of six months. By asserting that the petitioner was unaware of the issuance of notice in Form GST ASMT-14 and the show case notice because the said documents were uploaded by creating a temporary ID, the present writ petitions were filed.
3. By referring to Section 63 of applicable GST enactments and Rule 100 of the TNGST Rules, learned counsel for the petitioner contends that issuance of show cause notice in Form GST ASMT-14 is mandatory if proceedings are initiated under Section 63. She contends that the uploading of such notice on the temporary ID does not constitute service of notice as per section 169 of applicable GST enactments. She further submits that the petitioner remitted 10% of the disputed tax demand in respect of each assessment period and endeavored to file statutory appeals. Such appeals could not be filed because of the creation of the temporary ID. In these circumstances, learned counsel submits that the petitioner has been left without remedy. On instructions, learned counsel submits that the petitioner agrees to remit 10% of the disputed tax demand in respect of each assessment.
4. In response to the submissions, Mr.C.Harsha Raj, learned Additional Government Pleader, contends that the petitioner’s email ID and mobile number, as per the original GST Registration, were used for the purpose of the temporary ID. Consequently, he points out that the relevant password was communicated to the above mentioned e-mail ID and to the mobile number. Hence, he contends that the petitioner had access to the temporary ID.
5. On examining the orders impugned herein, it is evident that the tax liability was computed on best judgment basis by drawing on the particulars available in the auto – populated GSTR-2A. By using the total purchase value as the basis, the taxable value was arrived at and freight and miscellaneous charges and gross profit was added thereon. This exercise was carried out without hearing the petitioner in person and considering the petitioner’s objections.
6. In these facts and circumstances, it is just and necessary that the petitioner be provided an opportunity to contest the tax proposal on merits. Since the petitioner has remitted 10% of the disputed tax demand under the old registration, it is open to the petitioner to apply for refund of the same. If such application is made, the same should be considered and disposed of within a period of 30 days. In order to secure revenue interest in the meantime, as agreed to by the petitioner, the petitioner shall remit 10% of the disputed tax demand in respect of each assessment period. Such remittance shall be made within two weeks from the date of receipt of a copy of this order, without awaiting the outcome of the remand application.
7. Subject to compliance with the aforesaid conditions, the orders impugned are set aside and these matters are remanded for reconsideration. The petitioner is permitted to submit a reply to the show cause notice within the aforesaid period of two weeks. Upon receipt of the petitioner’s reply and upon being satisfied that 10% of the disputed tax demand for each assessment period was received, the first respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue fresh orders within three months from the date of receipt of the petitioner’s reply.
8. These writ petitions are disposed of on the above terms without any order as to costs. Consequently, connected miscellaneous petitions are closed.
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