Case Law Details
Arupadai Infrastructure Vs Deputy State Tax Officer – 2 (ST) (Madras High Court)
The case of Arupadai Infrastructure Vs Deputy State Tax Officer – 2 (ST) (Madras High Court) revolves around a challenge to an assessment order dated 17.11.2023, primarily on the grounds that the petitioner was not given a reasonable opportunity to contest the tax demand on its merits. The petitioner asserts that they were unaware of the proceedings leading to the impugned order until after its issuance and subsequent rejection of a rectification petition.
The assessment order in question addresses two issues: a discrepancy between the petitioner’s GSTR 3B returns and the GSTR 1 statement, and a mismatch in Reverse Charge Mechanism (RCM) liability. Regarding the first issue, the petitioner claims to have remitted the tax dues through DRC 03 dated 30.11.2023. As for the second issue, the petitioner argues that the mismatch in RCM liability was due to an inadvertent error made while filing GSTR 3B returns.
The petitioner’s counsel points out that the tax demand was partially recovered from the petitioner’s electronic credit ledger and partially from their bank account. The petitioner seeks another opportunity to contest the RCM liability mismatch issue.
The learned Government Advocate representing the respondent accepts notice and states that the impugned order followed an intimation, a show cause notice, and personal hearing notices.
The petitioner provides proof of payment of tax dues related to the discrepancy between GSTR 3B and GSTR 1. Regarding the RCM liability mismatch, the petitioner submits relevant GSTR 3B returns to demonstrate that the tax proposal stemmed from an inadvertent error.
Considering that the tax dues have been paid, the court sets aside the impugned order insofar as it relates to the RCM liability mismatch and remands the matter for reconsideration by the first respondent. The petitioner is directed to submit a reply to the show cause notice within fifteen days, and the first respondent is instructed to provide a reasonable opportunity to the petitioner, including a personal hearing. A fresh order is to be issued within three months from the date of receipt of the petitioner’s reply. The amounts appropriated concerning the RCM liability mismatch will abide by the outcome of the remand.
In conclusion, the writ petition is disposed of accordingly, with no costs incurred by either party. Consequently, related interim applications are closed.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
An assessment order dated 17.11.2023 is challenged in this writ petition on the ground that the petitioner did not have a reasonable opportunity to contest the tax demand on merits. The petitioner asserts that he was unaware of proceedings culminating in the order impugned herein until after such order was issued. The present writ petition was filed after filing a rectification petition, which was rejected.
2. Learned counsel for the petitioner referred to the impugned order and pointed out that such order deals with two issues. As regards the first issue pertaining to the difference between the petitioner’s GSTR 3B returns and the GSTR 1 statement, she points out that the petitioner remitted the tax dues relating thereto under DRC 03 dated 30.11.2023. With regard to the second issue pertaining to RCM liability mismatch, she points out that the mismatch occurred on account of an inadvertent error committed by the petitioner while filing GSTR 3B returns during the relevant assessment period. In particular, she submits that the petitioner specified the amounts in the row pertaining to ‘inward supplies liable to reverse charge’ instead of specifying it in the row relating to ‘all other ITC’. By pointing out that the tax demand was recovered partly from the petitioner’s electronic credit ledger and partly from the bank account of the petitioner, she seeks another opportunity to contest the RCM liability mismatch issue.
3. Mr. V. Prashanth Kiran, learned Government Advocate, accepts notice for the respondent. He submits that the impugned order was preceded by an intimation, a show cause notice and personal hearing notices.
4. The petitioner has placed on record proof of payment of tax dues relating to the difference between the petitioner’s GSTR 3B and GSTR 1. As regards the RCM liability mismatch, the petitioner has placed on record the relevant GSTR 3B returns to substantiate the contention that the tax proposal was the result of an inadvertent error. Since the tax dues appear to have been recovered, revenue interest has been secured at this juncture.
5. Therefore, impugned order dated 17.11.2023 is set aside insofar as it relates to RCM liability mismatch and the matter is remanded for reconsideration by the first respondent. The petitioner is directed to submit a reply to the show cause notice within fifteen days from the date of receipt of a copy of this order. The first respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within three months from the date of receipt of the petitioner’s reply. For the avoidance of doubt, it is made clear that the amounts appropriated in relation to the RCM liability mismatch shall abide by the outcome of the remand.
6. W.P.No.11342 of 2024 is disposed of on the above terms. No costs. Consequently, W.M.P.Nos.12436 and 12437 of 2024 are closed.
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