Yesem Marketing Vs Deputy Commercial Tax Officer (Madras High Court)
GST liability due to non-response to SCN: HC provides opportunity to contest tax demand on merits with a 10% pre-deposit
In a recent ruling, the Madras High Court addressed a crucial case involving Yesem Marketing and the Deputy Commercial Tax Officer regarding Goods and Services Tax (GST) liability. The court’s decision was centered on allegations of a breach of natural justice due to the inability of the petitioner to respond to a show cause notice (SCN).
Background of the Case
Yesem Marketing challenged an order dated 17th October 2023, which upheld a tax proposal against them. The petitioner argued that personal difficulties prevented them from responding to the show cause notice, thereby denying them a fair opportunity to contest the tax demand on its merits. The primary contention was that the tax liability was based solely on discrepancies between GSTR 1 statements and GSTR 3B returns.
Legal Arguments
The petitioner’s counsel argued a violation of natural justice, emphasizing that statutory rules were flouted as the proceedings were initiated without proper verification and solely on mismatch grounds. They contended that given an opportunity, they could demonstrate that the tax proposal was unfounded and should be dropped. As a condition for remand, the petitioner agreed to pre-deposit 10% of the disputed tax amount.
