Case Law Details
Blast Metal Spray Processors Vs Superintendent of GST and CE (Madras High Court)
Madras High Court addressed a writ petition filed by Blast Metal Spray Processors challenging an Order-in-Original (04/2022-GST) dated December 19, 2022. The petitioner, engaged in machining and surface treatment for windmill components, faced allegations of availing input tax credit (ITC) on invoices issued by fictitious suppliers, M/s. Mahendra Enterprises and M/s. Vijay Lakshmi Industries. Following an investigation initiated by the Chennai North Commissionerate, a show-cause notice (SCN) was issued on June 29, 2022. Despite being offered a personal hearing on December 6, 2022, the petitioner neither submitted a reply nor participated in the hearing, leading to the confirmation of tax demands and penalties.
The petitioner sought a final opportunity to present objections, citing a judgment in M/s. K. Balakrishnan, Balu Cables vs. Assistant Commissioner of GST (2024). In that case, the Madras High Court remanded a similar matter with conditions, including payment of 25% of disputed taxes. The petitioner claimed to have already remitted the entire tax amount and requested the lifting of a bank account attachment. The respondent raised no objection to granting the petitioner a fresh opportunity under specific conditions.
By mutual consent, the Court disposed of the petition with detailed directions. The impugned order was set aside, subject to the petitioner depositing 25% of disputed taxes within four weeks. Any prior payments, including pre-deposits, would be adjusted against this amount. Upon compliance, the impugned order would be treated as a show-cause notice, allowing the petitioner to file objections within an additional four weeks. If objections are filed, the adjudicating authority must consider them and issue a fresh order after a fair hearing. Non-compliance with the deposit or filing deadlines would result in the restoration of the original order.
The Court also directed that any recovery measures, such as bank account attachments, must be lifted upon meeting the conditions. The petitioner’s failure to comply with these timelines would lead to automatic reinstatement of the original order. The Court’s approach emphasized adherence to natural justice principles while balancing compliance obligations under the GST Act.
This decision aligns with judicial precedents that ensure taxpayers are granted an opportunity to address allegations, provided they meet preliminary conditions like partial payment of disputed taxes.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
The present writ petition is filed challenging the impugned Order-in- Original 04/2022-GST passed by the respondent dated 19.12.2022.
2. The petitioner is engaged in the business of machining and surface treatment for windmill components and is registered under the Goods and Services Tax Act, 2017. During the relevant period, the petitioner filed its returns and paid the appropriate taxes. However, an investigation was initiated by the Headquarters’ Preventive Unit after receiving an Alert Notice from Chennai North Commissionerate regarding passing of Input Tax Credit on the strength of the fake invoices without supply of goods by a fictitious supplier viz., M/s. Mahendra Enterprises. On investigation, it was noticed that the petitioner had allegedly availed Input Tax Credit in respect of invoices issued by the above said M/s. Mahendra Enterprises and also M/s Vijay Lakshmi Industries.
2.1. Pursuant thereto, summons were issued to the petitioner followed by a Show Cause Notice dated 29.06.2022. Personal hearing was offered on 06.12.2022. However, the petitioner had neither filed its reply nor availed the opportunity for a personal hearing. Hence, the impugned order came to be passed, confirming the proposal.
3. It is submitted by the learned counsel for the petitioner that if the petitioner is provided with an opportunity, they would be able to explain the alleged discrepancies.. The learned counsel for the petitioner would then place reliance upon the recent judgment of this Court in the case of M/s. K. Balakrishnan, Balu Cables vs. O/o. the Assistant Commissioner of GST & Central Excise in W.P.(MD)No.11924 of 2024 dated 10.06.2024, to submit that this court has remanded the matter back in similar circumstances subject to payment of 25% of the disputed taxes. It was further submitted that subsequent to the passing of the impugned order, the petitioner had remitted entire tax and that they may be granted one final opportunity before the adjudicating authority to put forth their objections to the proposal. It is submitted that there is bank attachment and the same may be lifted to which the learned Senior Standing Counsel appearing for the respondent does not have any serious objection.
4. By consent of both parties, the writ petition stands disposed of on the following terms:
a. The impugned Order-in-Original 04/2022-GST dated 19.12.2022.
b. The petitioner shall deposit 25% 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 25% of disputed taxes directed to be paid. The assessing authority shall then intimate the balance amount out of 25 % 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 25% 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 with 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 viz., payment of 25% 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 25 % 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 petitioner. It is made clear that if the above conditions viz., 25% 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.
5. There shall be no order as to costs. Consequently, connected miscellaneous petitions are closed.
Author Bio
