Case Law Details
Shree Shyama Traders Vs Assistant Commissioner (ST) (Madras High Court)
In a significant ruling that underscores the importance of procedural fairness in tax assessments, the Madras High Court has set aside an assessment order against Shree Shyama Traders, stemming from a dispute over Input Tax Credit (ITC) reversals and a consequential bank attachment order. This decision, dated back to the proceedings initiated in 2023, highlights the judiciary’s role in ensuring that taxpayers are given a fair chance to present their case before any adverse orders are passed against them.
Background of the Case
Shree Shyama Traders faced a challenging situation when it came to light that an assessment order issued on 11.08.2023, along with a subsequent bank attachment order dated 18.11.2023, was based on an alleged failure to respond to notices that the petitioner claimed never to have received. This lack of awareness prevented the petitioner from presenting its case effectively, particularly concerning the ITC availed from suppliers.
Critical Observations by the Court
The court paid heed to the petitioner’s argument that it had not engaged in transactions with one of the suppliers, Mahamaya Ispat (a division of Abhishek Steel Industries Limited), claimed to have issued credit notes leading to the ITC reversal. The petitioner’s inability to place this crucial piece of information on record, due to being unaware of the tax department’s proceedings, formed the basis of the court’s decision to remand the matter for reconsideration.
Legal Implications and Taxpayer Rights
This judgment is a reminder of the critical balance between the tax department’s duty to collect revenue and the taxpayer’s right to a fair hearing. The court’s decision to quash the assessment order and remand the matter for fresh consideration underscores the importance of ensuring that all relevant information and arguments are considered before reaching a decision that adversely affects taxpayers.
The Way Forward for Shree Shyama Traders
Following the court’s order, Shree Shyama Traders is granted an opportunity to submit a reply to the show cause notice within two weeks from receiving a copy of the court’s order. The tax department is directed to provide a reasonable opportunity for the petitioner, including a personal hearing, before issuing a fresh assessment order. This process ensures that the petitioner’s contentions are thoroughly evaluated, safeguarding their rights and interests.
Conclusion
The Madras High Court’s ruling in favor of Shree Shyama Traders serves as a precedent for the tax department and taxpayers alike, emphasizing the need for transparency, communication, and fairness in the assessment process. It highlights the judiciary’s role in protecting taxpayer rights and ensuring that justice is served through procedural fairness. As the matter is remanded for reconsideration, it opens a new chapter for Shree Shyama Traders to rectify the misunderstandings and present its case effectively, with the hope of a favorable outcome in the reassessment proceedings.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
The petitioner challenges an assessment order dated 11.08.2023 and the consequential bank attachment order dated 18.11.2023. The petitioner asserts that he was regular in filing returns. He further asserts that he was unaware of the issuance of the notice in Form ASMT-10, the show cause notice in Form DRC-01 and the assessment order dated 11.08.2023 until he received the impugned bank attachment order dated 18.11.2023. The present writ petition was filed in the said facts and circumstances.
2. Learned counsel for the petitioner invited my attention to the impugned assessment order and pointed out that the Input Tax Credit (ITC) availed of by the petitioner was reversed on the ground that three suppliers had issued credit notes to the petitioner. Out of the three, he submits that the petitioner did not purchase any products from Mahamaya Ispat, A Division of Abhishek Steel Industries Limited and that, therefore, the said entity did not issue credit notes during the relevant If the petitioner had knowledge of the proceedings initiated by the respondents, it is stated that the petitioner would have placed these facts on record. Learned counsel further submits that the aggregate sum of Rs.3,39,674/- was appropriated pursuant to the bank attachment order.
3. Mr. T.N.C. Kaushik, learned Additional Government Pleader, accepts notice on behalf of the first respondent. He submits that the reversal of ITC was on the basis of the auto populated GSTR-2A. He submits that this information was taken from the portal. Hence, he submits that no case is made out for interference.
4. The admitted position is that the entire demand under the assessment order of 2,82,760/- was satisfied by way of the remittance made by the bank to the tax department. Consequently, revenue interest is fully protected at this juncture. If the contention of the petitioner that no supplies were effected by Abhishek Steel Industries Limited is found to be correct, the reversal of ITC to that extent may warrant revision. Solely for this reason, the impugned order calls for interference.
5. Therefore, the impugned assessment order dated 11.08.2023 is quashed and the matter is remanded for re-consideration by the first respondent. The petitioner is permitted to submit a reply to the show cause notice dated 11.07.2023 within a maximum period of two weeks from the date of receipt of a copy of this order. Upon receipt thereof, the first respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh assessment order within a maximum period of two months thereafter. For the avoidance of doubt, it is made clear that the amounts appropriated pursuant to the assessment order shall be retained subject to the outcome of the remanded proceedings.
6. W.P.No.3967 of 2024 is disposed of on the above terms. No costs. Consequently, W.M.P.Nos.4283, 4284 and 4286 of 2024 are closed.
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