Case Law Details
Tvl.Sri Renga Steels Vs Assistant Commissioner (ST) (Madras High Court)
Conclusion: Assessee was granted an opportunity to explain discrepancies in their GST returns, specifically related to excess claims of Input Tax Credit (ITC) from cancelled dealers, return defaulters, and tax non-payers as the supplier undergone liquidation subject to deposit 10% of the disputed taxes as admitted by assessee and the respondent, within a period of four weeks from the date of receipt of a copy of this order.
Held: Assessee was a dealer in Iron and Steel, had filed its returns and paid the necessary taxes for the 2019-20 period. However, discrepancies were found, including the claim of ITC from a supplier whose taxes had not been filed. Assessee argued that taxes were paid to the supplier, M/s. Kamakshi Industries, which had gone into liquidation, and that this should not affect the ITC claim. AO had rejected assessee’s objections and confirmed the denial of ITC based on the supplier’s failure to file GSTR-3B returns. Assessee then approached the court, seeking an opportunity to explain the discrepancies. It was held that assessee should deposit 10% of the disputed taxes as admitted by assessee and the respondent, within a period of four weeks from the date of receipt of a copy of this order. If any amount has been recovered or paid out of the disputed taxes, including by way of pre-deposit in appeal, the same would be reduced/adjusted from/towards the 10% of disputed taxes directed to be paid. AO should then intimate the balance amount out of 10% of disputed taxes to be paid, if any, within a period of one week from the date of receipt of a copy of this order. The entire exercise of verification of payment, if any, intimation of the balance sums, if any, to be paid for compliance with the direction of payment of 10% of the disputed taxes, after deducting the sums already paid and payment by assessee of the balance amount, if any, on intimation in compliance of the above direction should be completed within a period of four weeks from the date of receipt of copy of this order.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
The present writ petition is filed challenging the impugned order dated 24.08.2024, passed by the respondent on the premise that the same was made in violation of principles of natural justice.
2. It is submitted by the learned counsel for the petitioner that the petitioner is a dealer in Iron and Steel and is registered under the GST During the relevant period of 2019-20, the petitioner had filed the returns and paid appropriate taxes. However, on examination of the information furnished in the return the following discrepancies were found:
i. Excess claim of ITC.
ii. ITC claimed from cancelled dealers, return defaulters and tax non payers.
3. It is submitted by the learned counsel for the petitioner that an intimation in Form DRC01 was issued on 18.05.2024 followed by 2 reminders viz., 08.07.2024 and 02.08.2024. It is submitted by the learned counsel for the petitioner that the petitioner submitted its reply dated 22.08.2024, wherein it was submitted that the supplier M/s.Kamakshi Industries from whom the raw materials were purchased has gone into liquidation and though the taxes have been paid by the petitioner to the said M/s.Kamakshi Industries, however, the proposal to reject the petitioner’s claim of Input Tax Credit on the premise that the supplier has not paid the taxes so collected cannot result in denial of the benefit of Input Tax Credit to the petitioner. However, the authority had rejected that the above objections and confirmed the above proposal rejecting the claim of Input Tax Credit on finding that the supplier had not filed GSTR 3B returns. It is submitted by the learned counsel for the petitioner that if the petitioner is provided with an opportunity, he would be able to explain the alleged discrepancies.
4. The learned counsel for the petitioner would place reliance upon the recent judgment of this Court in the case of Sree Manoj International Vs. Deputy State Tax Officer in W.P.No.10977 of 2024 dated 25.04.2024, to submit that this court has remanded the matter back in similar circumstances subject to payment of 10% of the disputed taxes.
5. It was further submitted that the petitioner is ready and willing to pay 10% of the disputed tax and that he may be granted one final opportunity before the adjudicating authority to put forth their objections to the proposal, to which the learned Additional Government Pleader appearing for the respondent does not have any serious objection.
6. By consent of both parties, the writ petition stands disposed of on the following terms:
a. The impugned order dated 08.2024 is set aside
b. mThe petitioner shall deposit 10% of the disputed taxes as admitted by the learned counsel for the petitioner and the respondent, within a period of four weeks from the date of receipt of a copy of this order.
c. If any amount has been recovered or paid out of the disputed taxes, including by way of pre-deposit in appeal, the same would be reduced/adjusted from/towards the 10% of disputed taxes directed to be paid. The assessing authority shall then intimate the balance amount out of 10% of disputed taxes to be paid, if any, within a period of one week from the date of receipt of a copy of this order. The petitioner shall deposit such remaining sum within a period of three weeks from such intimation.
d. The entire exercise of verification of payment, if any, intimation of the balance sums, if any, to be paid for compliance with the direction of payment of 10% of the disputed taxes, after deducting the sums already paid and payment by the petitioner of the balance amount, if any, on intimation in compliance of the above direction shall be completed within a period of four weeks from the date of receipt of copy of this order.
e. Failure to comply with the above condition , payment of 10% of disputed taxes within the stipulated period i.e., four weeks from the date of receipt of a copy of this order shall result in restoration of the impugned order.
f. If there is any recovery by way of attachment of Bank account or garnishee proceedings, the same shall be lifted /withdrawn on complying with the above condition viz., payment of 10% of the disputed taxes.
g. On complying with the above condition, the impugned order of assessment shall be treated as show cause notice and the petitioner shall submit its objections within a period of four (4) weeks from the date of receipt of a copy of this order along with supporting documents/material. If any such objections are filed, the same shall be considered by the respondent and orders shall be passed in accordance with law after affording a reasonable opportunity of hearing to the It is made clear that if the above conditions viz., 10% of disputed taxes is not complied or objections are not filed within the stipulated period, four weeks respectively from the date of receipt of a copy of this order, the impugned order of assessment shall stand restored.
7. There shall be no order as to costs. Consequently, connected miscellaneous petitions are closed.
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