Madras HC Allows Appeal in GST Case with 25% Pre-Deposit

Solai Venkateshwara Stores Vs The State Tax Officer (Madras High Court)

In a significant ruling, the Madras High Court has allowed Solai Venkateshwara Stores to file an appeal against GST assessment orders with a condition of a 25% pre-deposit. The case arose from a GST inspection that revealed stock from a demolished godown of the petitioner’s sister concern, leading to demands for tax, interest, and penalties.

Background of the Case

Solai Venkateshwara Stores, a proprietrix concern, challenged the GST assessment orders for the financial years 2021-22 and 2022-23. The orders confirmed substantial tax demands, including interest and penalties, amounting to Rs. 14,12,932 for 2021-22 and Rs. 6,14,914 for 2022-23. The dispute originated from the discovery of stock from a demolished godown during a GST inspection, which the petitioner claimed was transferred from her sister’s concern.

Challenges Faced by the Petitioner

The petitioner’s counsel argued that due to the illness and subsequent hospitalization of the petitioner’s husband, Mr. Bhuvanesh Kumar, there was an inability to file the statutory appeal within the stipulated time. Additionally, the petitioner faced financial constraints as the Department had already attached her bank account and recovered amounts from her Electronic Credit Ledger.

Court’s Consideration

The Court took into account the petitioner’s circumstances and the arguments presented. It acknowledged the difficulties faced by the petitioner and the significant impact of the imposed demands on her financial situation. The learned counsel for the petitioner requested the Court to allow the filing of a statutory appeal before the Appellate Deputy Commissioner (GST), Trichy, with a partial pre-deposit, given the unjustified nature of the demands and penalties.

Judgment and Directions

The Madras High Court, exercising its discretion, partly favored the petitioner. The Court granted permission to file the statutory appeal within 30 days from the date of receipt of the order, with an additional 25% pre-deposit of the disputed tax amount, over and above the amounts already recovered. The Appellate Deputy Commissioner (GST), Trichy, was directed to entertain and dispose of the appeal on merits within three months of its filing.

If the petitioner fails to comply with the pre-deposit condition, the relief granted by the Court would automatically stand revoked. The Court disposed of the Writ Petitions with these directions, ensuring that the petitioner’s appeal would be heard, thereby providing a pathway to challenge the assessment orders.

Conclusion

The Madras High Court’s decision in the case of Solai Venkateshwara Stores vs. The State Tax Officer highlights the judiciary’s balanced approach in providing relief while ensuring compliance with statutory requirements. By allowing the petitioner to file an appeal with a 25% pre-deposit, the Court has offered a fair opportunity to contest the GST demands under challenging circumstances. This judgment underscores the importance of judicial discretion in tax-related disputes, ensuring that justice is served while maintaining procedural integrity.

FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT

By this common order, these two Writ Petitions are disposed of. Heard learned counsel for the petitioner and learned Additional Government Pleader for the respondents.

2. The petitioner/Proprietrix concern is before this Court challenging the impugned orders dated 30.05.2023 and 26.05.2023 bearing reference No. GSTIN: 33AUVPL3939J1Z0 for the assessment years 2021-22 and 2022-23, respectively, whereby the demands proposed in the show cause notices, that preceded the impugned orders, have been confirmed.

3. By these impugned orders, the following amounts have been confirmed:

4. It is the case of the petitioner that the godown of the sister’s concern was demolished and therefore, the stocks were transferred and were found in the premises of the petitioner at the time of inspection on 13.05.2022.

5. The learned counsel for the petitioner submits that after the order was passed, the petitioner’s husband Mr. Bhuvanesh kumar fell ill and was hospitalized. Hence, the petitioner could not file statutory appeal before the Appellate Deputy Commissioner (GST), Trichy, in terms of Section 107 of the respective GST enactments.

6. It is submitted that the Department has, now, attached the bank account of the petitioner towards tax liability, interest and penalty for a sum of Rs.20,27,846/- on 22.05.2024.

7. The learned counsel for the petitioner submits that the petitioner has also paid a sum of Rs.1,00,000/- in cash and that the Department itself has recovered a sum of Rs.40,096/- from the petitioner’s Electronic Credit Ledger.

8. It is submitted that the petitioner may be given one opportunity to file statutory appeal as the demand that has been confirmed is unjustified and the interest and penalty that has been imposed on the petitioner as a cash getting effect in the petitioner’s tax liability.

9. Having considered the submissions made by the learned counsel for the petitioner and the learned Additional Government Pleader for the respondents, the Court is inclined to exercise the discretion partly in favour of the petitioner by granting relief to file statutory appeal before the Appellate Deputy Commissioner (GST), Trichy. For the aforesaid purpose, Appellate Deputy Commissioner (GST), Trichy is suo motu impleaded as second respondent in these Writ Petitions.

10. The petitioner shall file an appeal within a period of 30 days from the date of receipt of a copy of this order together with the deposit of another 25% of the disputed tax over and above the amount that is said to have been recovered from the petitioner. Subject to above, the second respondent shall entertain the petitioner’s appeals and dispose of on merits and in accordance with law as expeditiously as possible preferably within a period of three months of filing of appeal. In case the petitioner fails to file such an appeal with pre-deposit as ordered, the relief granted by this Court shall stand automatically revoked, sine

These Writ Petitions are disposed of, with above directions. No costs. Consequently, connected miscellaneous petitions are closed.