Case Law Details
Tvl. Senthil Hardwares Vs State Tax Officer (Madras High Court)
The Hon’ble Madras High Court in the case Tvl. Senthil Hardwares v. State Tax Officer, Pattukottai [W.P. (MD) No. 17626/2024 dated July 30, 2024] the order where a Show Cause Notice (“SCN”) was issued to the Assessee vide FORM DRC-01 and reply filed by the Assessee was accepted by the Department, but certain part of demand was confirmed vide the Order in respect of defect, which was not part of notice.
Facts:
M/s Tvl. Senthil Hardwares (“the Petitioner”) was issued a notice in FORM DRC 01 on the GST Portal on April 19, 2022, followed by a reminder for a personal hearing dated February 13, 2024 and that the personal hearing was held on April 27, 2024.
The Petitioner that on the said date, filed a detailed reply, which has also been accepted by the State Tax Officer (“the Respondent”). However, Order dated April 27, 2024 (“the Impugned Order”) served by the Respondent demanded INR 16,36,068/-.
The amount under a defect that was not part of the Impugned Notice issued to the Petitioner dated April 27, 2024, and hence the Petitioner was not made part of the reply dated April 27, 2024.
Hene, aggrieved by the circumstances, the Petitioner filed the present writ petition.
Issue:
Whether an Order can be passed beyond the defects mentioned in the SCN?
Held:
The Hon’ble Madras High Court in W.P. (MD) NO. 17626/2024 held as under
- Observed that, the Impugned Order suffers from the gross violation of the principles of natural justice as the Petitioner was not put to notice on defects. Therefore, the reasoning, which produced in conclusion of the Impugned Order, is also unsustainable.
- Held that, the Impugned Order, which stands quashed, shall be treated as corrigendum to the Impugned Notice. The Respondent was also directed to issue fresh additional addendum to the Impugned within a period of 45 days. The Petitioner shall, thereafter, file a reply to the same within a period of 30 days. The Respondent shall thereafter pass a fresh order on merits and in accordance with law as expeditiously as possible preferably within a period of two months.
Our Comments:
In a pari materia case, the Hon’ble Apex Court in the case of Commissioner of Customs, Mumbai v. Toyo Engineering India Ltd. ((2006) 7 SCC 592) held that the Department cannot travel beyond the show-cause notice.
The principles of natural justice say that the party which is penalised must be heard and given time opportunity to preset his defence which is encapsulated in the legal maxim “ Audi Aultem Partem”, the judgment has upheld the principles of natural justice and protected the taxpayer from arbitrary use of power.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
This Writ Petition is disposed of at the time of admission after hearing the learned counsel for the petitioner and learned Additional Government Pleader for the respondent and after dispensing with the counter filed by the respondent.
2. The petitioner is before this Court against the impugned order dated 27.04.2024 passed by the respondent for the assessment year 2018-19 bearing reference in 33AKBPN2569C1ZH.
3. By the impugned order, the respondent has confirmed the following amounts as tax due from the petitioner together with the interest and penalty:
4. The specific case of the petitioner is that the petitioner was issued with a 2/7 notice in DRC 01 in GST portal on 19.04.2022, followed by remainder for personal hearing dated 13.02.2024 and that the personal hearing was held on 27.04.2024.
5. It is the case of the petitioner that on the said date, the petitioner filed a detailed reply, which has also been accepted by the respondent. However, in the impugned order, the respondent has demanded the aforesaid amount.
6. It is submitted that the aforesaid amount was not a part of the notice that was issued to the petitioner in GSTR 01 dated 19.04.2022, which was replied by the petitioner on 27.04.2024.
7. The learned Additional Government Pleader for the respondent, on the other hand, would submit that the petitioner has not produced the requisite documents to substantiate that the petitioner had validly availed the Input Tax Credit and therefore, the impugned order has been confirmed the demand as detailed above.
8. Having considered the submissions made by the learned counsel for the petitioner and learned Additional Government Pleader for the respondent, the Court is of the view that the impugned order suffers from the gross violation of the principles of natural justice as the petitioner was not put to notice on defect No.1. Therefore, the reasoning, which produced in conclusion of the impugned order, is also unsustainable, as reads under:
9. In view of the above, the Court is left with no other option, but to quash the impugned order and to remit the case back to the respondent to pass a fresh order on merits.
10. The impugned order, which stands quashed, shall be treated as 5/7 corrigendum to the notice in DRC 01 dated 19.04.2022. The respondent is also directed to issue fresh additional addendum to the above as a show cause notice within a period of 45 days from today. The petitioner shall, thereafter, file a reply to the same within a period of 30 days. The respondent shall thereafter pass a fresh order on merits and in accordance with law as expeditiously as possible preferably within a period of two months. Needless to state, the petitioner shall be heard before passing the order.
This Writ Petition is allowed, with above directions. No costs. Consequently, connected miscellaneous petitions are closed.
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