Case Law Details
Jinvar Trading Company Vs Commercial Tax Officer-2 (Madras High Court)
Introduction: In a recent judgment, the Madras High Court addressed the case of Jinvar Trading Company vs. Commercial Tax Officer-2, where a significant issue arose due to discrepancies between the GSTR 3B returns and the GSTR 1 statements. The petitioner, Jinvar Trading Company, contended that the mismatch was caused by an erroneous GST calculation at 36% for certain items. This article delves into the detailed proceedings, the court’s analysis, and the final judgment that called for a reconsideration of the case.
Detailed Analysis: The case stemmed from an order dated October 30, 2023, which Jinvar Trading Company challenged on the grounds of not having a reasonable opportunity to contest the tax demand. The core of the issue was a mismatch between the GSTR 3B returns and GSTR 1 statements, reportedly due to a 36% GST calculation error on certain items during the relevant assessment period.
1. Petitioner’s Argument: The petitioner argued that they were unaware of the proceedings leading to the impugned order. The oversight was attributed to the part-time accountant’s failure to check the “View Additional Notices and Orders” tab on the GST portal. This lapse resulted in the non-receipt of crucial notices and orders. The petitioner’s counsel highlighted that a sum of ₹68,677/- had been recovered from the electronic credit ledger, a significant portion of the disputed tax liability of ₹92,423/-.
2. Respondent’s Defense: The Government Advocate, representing the respondent, contended that sufficient opportunity had been provided to the petitioner to contest the tax demand. Notices were issued in Form ASMT 10, and a show cause notice had been duly served.
3. Court’s Observations: Upon reviewing the impugned order, the court noted the tax liability stemmed from the mismatch between the GSTR 3B return and the GSTR 1 statement. The petitioner’s counsel provided prima facie evidence showing that GST was incorrectly computed at 36% for certain items. The court acknowledged that the petitioner had not responded to the show cause notice or participated in the personal hearing, leading to the confirmation of the tax proposal.
Conclusion: The Madras High Court concluded that justice necessitated providing the petitioner with an opportunity to contest the tax demand on its merits. Therefore, the court set aside the impugned order dated October 30, 2023, and remanded the matter for reconsideration. The petitioner was granted two weeks to submit a reply to the show cause notice, and the respondent was directed to provide a reasonable opportunity, including a personal hearing, before issuing a fresh order within three months. The amount debited from the petitioner’s electronic credit ledger will abide by the outcome of the remanded proceedings.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
An order in original dated 30.10.2023 is challenged on the ground that the petitioner did not have a reasonable opportunity to contest the tax demand on merits.
2. By asserting that the petitioner was unaware of proceedings culminating in the impugned order because the petitioner’s part-time accountant did not verify the “View Additional Notices and Orders” tab on the GST portal, wherein the notices and orders were uploaded, the present writ petition was filed.
3. Learned counsel for the petitioner submits that the tax proposal pertains to the disparity between the petitioner’s GSTR 3B return and the GSTR 1 statement. She further points out that such disparity arose on account of the calculation of GST at 36% in the GSTR 1 statement. She also points out that a sum of Rs.68,677/- was recovered from the petitioner by way of debit from the petitioner’s electronic credit ledger. She points out that this amount represents a significant portion of the disputed tax liability of 92,423/-. here fore, she seeks an opportunity to contest the tax demand on merits.
4. Mrs. K. Vasanthamala, learned Government Advocate, accepts notice for the respondent. She points out that sufficient opportunity was provided to the petitioner to contest the tax demand on merits by issuing a notice in Form ASMT 10 and a show cause notice.
5. On perusal of the impugned order, as contended by learned counsel for the petitioner, it is clear that tax liability pertains to mismatch between the GSTR 3B return and the GSTR 1 statement. Learned counsel for the petitioner has placed on record prima facie evidence that GST was computed at the rate of 36% in respect of certain items in January and February of the relevant assessment period. It is also clear from the impugned order that the tax proposal was confirmed because the petitioner did not respond to the show cause notice or participate in the personal In the circumstances outlined above, the interest of justice warrants that an opportunity be provided to the petitioner especially because a substantial portion of the tax demand was recovered.
6. For reasons set out above, the impugned order dated 30.10.2023 is set aside and the matter is remanded for reconsideration by the respondent. The petitioner is permitted to submit a reply to the show cause notice dated 21.09.2023 within a period of two weeks from the date of receipt of a copy of this order. Upon receipt of the petitioner’s reply, the 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 amount debited from the petitioner’s electronic credit ledger towards tax liability under the impugned order shall abide by the outcome of the remanded proceedings.
The writ petition is disposed of on the above terms without any order as to costs. Consequently, connected miscellaneous petitions are closed.
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