Case Law Details
Zulaikha Motors Private Limited Vs Assistant Commissioner of GST (Madras High Court)
In a recent development, the Madras High Court has directed a fresh order regarding the payment of 10% of the disputed GST demand in the case of Zulaikha Motors Private Limited versus Assistant Commissioner of GST.
The petition challenges orders related to the assessment period of 2017-2018, citing a breach of principles of natural justice. It asserts that a change in management occurred on 01.01.2024, and the current management was unaware of the proceedings leading to the impugned orders.
Upon examination of the orders, it was found that the petitioner failed to respond to both the intimation and the show cause notice. The tax demand was confirmed due to this failure to respond, with discrepancies between the GSTR 3B, GSTR 1, and GSTR 9 returns cited as the basis for the confirmation. However, no reasons were provided in support of the tax demand, apart from the failure to reply to the show cause notice.
The court, while acknowledging the petitioner’s failure to respond, deemed it just and appropriate to provide an opportunity to contest the tax demand on merits. It ordered the quashing of the impugned orders, with the condition that the petitioner remit 10% of the disputed tax demand within two weeks. Additionally, the petitioner was permitted to submit a reply to the show cause notice within the same period. Upon receipt of the reply and confirmation of the remittance, the respondent was directed to provide a reasonable opportunity for a personal hearing and issue fresh orders within two months.
In summary, the Madras High Court’s directive ensures a fair opportunity for the petitioner to contest the tax demand while emphasizing compliance with procedural requirements and principles of natural justice.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
By these two writ petitions, orders pertaining to the assessment period 2017-2018 are challenged on the ground of breach of principles of natural justice.
2. The petitioner asserts that there was a change in management of the petitioner company and that the new management took over on 01.01.2024. As a consequence of such change in management, it is stated that the current management was unaware of proceedings culminating in the orders impugned herein.
3. Learned counsel for the petitioner invited my attention to the orders impugned herein and pointed out that the tax demand was confirmed merely on account of the failure of the petitioner to reply to the show cause notice. He also points out that no reasons are recorded in support of the confirmation of the tax demand.
4. Mr. T.N.C.Kaushik, learned Additional Government Pleader, accepts notice for the respondent. By referring to the orders impugned herein, he points out that the intimation in respect of the assessment order dated 19.12.2023 was issued on 09.09.2023. By further submitting that the show cause notice was issued on 28.09.2023, he points out that the tax demand was confirmed because the petitioner failed to respond to either the intimation or the show cause notice.
5. On examining the orders impugned herein, it is clear that the petitioner failed to respond either to the intimation or to the show cause notice. A change in management does not justify the failure to respond to the show cause notice. On examining the impugned order, it is evident that discrepancies between the GSTR 3B, GSTR 1 and GSTR 9 returns was the basis for confirming the tax demand. The impugned order contains no reasons in support of the tax demand except the failure of the petitioner to reply to the show cause notice. In these circumstances, albeit by putting the petitioner on terms, it is just and appropriate to provide the petitioner an opportunity to contest the tax demand on merits.
6. On instructions, learned counsel for the petitioner submits that the petitioner is willing to remit 10% of the disputed tax demand under order dated 19.12.2023 as a condition for remand.
7. Consequently, the orders impugned herein are quashed subject to the condition that the petitioner remits 10% of the disputed tax demand as agreed to under order dated 19.12.2023. Such remittance shall be made within a maximum period of two weeks from the date of receipt of a copy of this order. Within the aforesaid period, the petitioner is also permitted to submit a reply to the show cause notice. Upon receipt thereof and upon being satisfied that 10% of the disputed tax demand was received, the respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue fresh orders within a period of two months from the date of receipt of the petitioner’s reply.
8. These writ petitions are disposed of on the above terms. There will be no order as to costs. Consequently, connected miscellaneous petitions are closed.
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