Case Law Details
M. Kandasamy Vs Deputy State Tax Officer-2 (Madras High Court)
In a recent judgment, the Madras High Court addressed the case of M. Kandasamy versus Deputy State Tax Officer-2, wherein an assessment order dated 30.12.2023 came under scrutiny. The petitioner, M. Kandasamy, is the son of the late Kandappagounder Muthu, a registered individual under the GST enactments, engaged in the trading of processed turmeric. The proceedings in question were initiated against Muthu in relation to the assessment period 2017-18. However, owing to his demise, the petitioner responded to the show cause notice on his behalf. Subsequently, the impugned order was passed on 30.12.2023.
The petitioner challenged the order on various grounds. Firstly, it was contended that the respondent lacked the entitlement to invoke Section 74 of the GST enactments due to the absence of essential elements. Secondly, it was argued that the petitioner’s father dealt in non-perishable goods, specifically processed turmeric, and as such, he had purchased these goods during the assessment period but did not make any sales. Consequently, nil returns were filed for the outward supply during the relevant period. However, the respondent presumed a deemed sale in February 2019, calculating tax liabilities accordingly. Notably, the petitioner was not accorded a personal hearing prior to the issuance of the order. Lastly, it was asserted that any sale in February 2019 would fall under the assessment period 2018-19, not 2017-18.
In response, Mr. V. Prashanth Kiran, learned Government Advocate, representing the respondents, contended that given the nil returns filed by the petitioner’s father for outward supplies in 2017-18, there was a reasonable basis to suspect suppression of sales. Additionally, it was argued that the petitioner failed to furnish the books of account to substantiate the absence of sales during the said period.
The Court observed that while the show cause notice proceeded on the basis of suppressed sales, the impugned order assumed a deemed sale without providing any rationale for such assumptions. Moreover, the petitioner was not notified of this deemed sale, thereby depriving them of an opportunity to contest it. The absence of a personal hearing further compounded the procedural irregularities, violating Section 75(4) of the CGST Act 2017.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Author Bio
