Case Law Details
Tvl. B.L. Collection Vs Deputy Commercial Tax Officer (Madras High Court)
Introduction: The case of Tvl. B.L. Collection vs. Deputy Commercial Tax Officer before the Madras High Court raises significant questions regarding the ability of a taxpayer to contest a GST demand in light of medical circumstances.
The petitioner, engaged in cloth and apparel trade, faced challenges in responding to a show cause notice and participating in proceedings due to a cancer diagnosis. Despite the petitioner’s inability to engage in the process, the tax proposal against them proceeded based on non-response. However, the petitioner, through legal representation, argued for an opportunity to explain discrepancies between their GSTR 3B returns and auto-populated GSTR 2A.
The Madras High Court, upon reviewing the case, found merit in the petitioner’s plea, emphasizing the principle of natural justice. Acknowledging the petitioner’s illness as a valid reason for non-participation, the court set aside the original order and remanded the matter for reconsideration. This decision highlights the court’s commitment to fairness, ensuring that individuals facing health challenges are not unfairly penalized.
As part of the remand, the court mandated a 10% pre-deposit of the disputed tax demand, demonstrating a balance between the interests of the taxpayer and revenue authorities. This requirement aims to safeguard revenue while affording the petitioner an opportunity to present their case effectively.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
An order in original dated 01.09.2023 and proceedings consequent thereto are challenged in this writ petition.
2. The petitioner is engaged in the business of buying and selling cloth and apparel. By asserting that the petitioner was unable to respond to the show cause notice or participate in proceedings due to the petitioner being diagnosed with cancer in 2021, the present writ petition was filed.
3. Learned counsel for the petitioner submits that the tax proposal pertains to the discrepancy between the petitioner’s GSTR 3B returns and the auto-populated GSTR 2A. If provided an opportunity, he submits that such discrepancy would be explained by the petitioner. He points out that the petitioner could not participate because he was seriously ill during the relevant period.
4. Mrs. K. Vasanthamala, learned Government Advocate, accepts notice for respondents 1 & 2. She points out that notice in Form ASMT 10 was issued to the petitioner in May 2023 and that this was followed by a show cause notice dated 30.06.2023 and personal hearing notice dated 01.08.2023.
5. On examining the impugned order, it is evident that the tax proposal was confirmed on the ground that the petitioner did not respond to the show cause notice or attend the personal hearing. Upon consideration of the averments in the affidavit and the submissions of learned counsel, the interest of justice warrants that the petitioner be provided an opportunity by putting the petitioner on terms. Learned counsel submits, on instructions, that the petitioner agrees to remit 10% of the disputed tax demand as a condition for remand.
6. Therefore, the impugned order dated 01.09.2023 is set aside and the matter is remanded for reconsideration on condition that the petitioner remits 10% of the disputed tax demand as agreed to within a period of two weeks from the date of receipt of a copy of this order. The petitioner is also permitted to submit a reply to the show cause notice within the aforesaid period. Upon receipt of the petitioner’s reply and upon being satisfied that 10% of the disputed tax demand was received, respondents 1 & 2 are directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within three months from the date of receipt of the petitioner’s reply. Since the order in original
7. The writ petition is disposed of on the above terms without any order as to costs. Consequently, connected miscellaneous petitions are closed.
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