Case Law Details
Tvl. Arumugasamy Alloy Metal Suppliers Vs Deputy State Tax Officer-2 (Madras High Court)
The Madras High Court addressed a writ petition filed by Tvl. Arumugasamy Alloy Metal Suppliers against the Deputy State Tax Officer-2, concerning an assessment order for the financial year 2018-19. The petitioner, a metal trader registered under the Goods and Services Tax (GST) Act, challenged an order that reversed input tax credit availed from invoices issued by Jaya Trading Company. This reversal stemmed from an investigation by the CGST and Central Excise Department, which alleged that Jaya Trading Company fraudulently passed on input tax credit without actual goods supply, a practice known as bill trading. The petitioner was identified as a recipient of such invoices, leading to the impugned order. Prior to the order, the petitioner received a DRC-01A notice, a show cause notice (DRC-01), and several opportunities for personal hearings, all of which were not utilized, resulting in the confirmation of the proposed tax reversal.
During the court proceedings, the petitioner’s counsel referred to a recent judgment, M/s. K. Balakrishnan, Balu Cables vs. O/o. the Assistant Commissioner of GST & Central Excise, and expressed willingness to pay 25% of the disputed tax. The petitioner requested a final opportunity to present objections before the adjudicating authority. The respondent’s counsel did not object to this proposal. Consequently, the court disposed of the writ petition with specific terms. The impugned order was set aside, contingent upon the petitioner depositing 25% of the disputed taxes within four weeks. Any previously recovered or paid amounts, including pre-deposits, were to be adjusted against this 25%. The assessing authority was directed to inform the petitioner of any remaining balance, which was to be paid within three weeks of notification. Non-compliance would result in the restoration of the original assessment order. Furthermore, any bank account attachments or garnishee proceedings were to be lifted upon compliance. Upon payment of the 25%, the original assessment order would be treated as a show cause notice, allowing the petitioner four weeks to submit objections with supporting documentation. The respondent was then required to consider these objections and pass orders after providing a hearing. Failure to comply with the payment or objection deadlines would restore the original assessment. No costs were awarded, and associated miscellaneous petitions were closed.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
The present Writ Petition is filed challenging the impugned order passed by the respondent dated 30.04.2024 relating to the assessment year 2018-19.
2. The petitioner is engaged in the business of trading of metals and is a registered dealer under Goods and Services Act, 2017. During the relevant period, the petitioner had filed its return and paid appropriate taxes. An investigation was launched against one Jaya Trading Company by the CGST and Central Excise Department. During the course of investigation, it was allegedly found that the said Jaya Trading Company has been fraudulently passing on input tax credit without actual supply of goods in contravention of the GST Act, in other words, they have engaged in bill trading, without actual supply of goods. On scrutiny of the GSTR 1 filed by the said Jaya Trading Company, it was noticed that the petitioner is one of the recipients. In view thereof, the credit which has been availed by the petitioner on the strength of the invoices, issued by the said Jaya Trading company was sought to be reversed.
2.0. Pursuant thereto, a notice in DRC-01A was issued to the petitioner on 24.05.2023, followed by a show cause notice in DRC-01 on 12.09.2023. Further, persona hearing cum reminder were offered to the petitioner on 10.2023, 27.10.2023 and 17.11.2023. However, the petitioner had neither filed its reply nor availed the opportunities of personal hearings. Hence, the impugned order came to be passed, confirming the proposal.
3. The learned counsel for the petitioner would 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. It was further submitted that the petitioner is ready and willing to pay 25% 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 Special Government Pleader appearing for the respondent does not have any serious objection.
4. By consent of parties, the writ petition stands disposed of on the following terms:
a) The impugned order dated 04.2024 is set aside
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 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 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.
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