Case Law Details
Star Brand Enterprises Vs Deputy Commissioner GST and CE (Madras High Court)
CHENNAI: The Madras High Court has conditionally set aside an Order-in-Original dated March 20, 2024, confirming a GST demand of ₹69,62,780, along with interest and penalty, against Star Brand Enterprises. The court has granted the petitioner an opportunity to file a detailed reply and seek a fresh personal hearing, provided they deposit 25% of the disputed tax amount.
The writ petition was filed by Star Brand Enterprises, engaged in the business of trading Cashew Kernels, Raisin, and Toor Dhall, challenging the confirmed demand. Mr. A.P. Srinivas, learned Senior Standing Counsel (Taxes), appeared for the respondent. The court, with the consent of both parties, took up the writ petition for disposal at the admission stage.
The petitioner’s counsel informed the court that the respondent had issued a show cause notice (SCN) on December 15, 2023, proposing the aforementioned demand. Upon receiving the SCN, the petitioner engaged a consultant to respond. The consultant attended a personal hearing on March 5, 2024, and requested time to file a detailed reply. However, the counsel stated that the consultant subsequently filed only a “cryptic reply” denying the allegations in the SCN, failing to provide a detailed response with proper supporting evidence. Consequently, the demand proposed in the SCN was confirmed by the respondent through the impugned order dated March 20, 2024.
A further complication arose due to a change in the petitioner’s business address. The impugned order was dispatched to the petitioner’s previously registered place of business. The petitioner’s counsel submitted that they only became aware of the impugned order in August 2024, well after the expiry of the statutory appeal period. This delay prevented the petitioner from filing a timely appeal.
Given these circumstances, the petitioner expressed readiness to deposit 25% of the disputed tax demand pertaining to the impugned assessment period. They prayed for the impugned order to be set aside, requesting that the respondent be directed to allow them to file a detailed reply and provide a fresh opportunity for a personal hearing to substantiate their case.
The learned Senior Standing Counsel for the respondent, while acknowledging the voluntary submissions made by the petitioner’s counsel, indicated that if the court deemed it appropriate and a fit case for re-consideration, it could pass orders subject to the deposit of 25% of the disputed tax demand.
After hearing both sides and reviewing the available records, the court acknowledged that the petitioner had indeed failed to file a detailed reply with supporting documents, leading to the confirmation of the demand. The court recognized the petitioner’s assertion that their consultant failed to provide a comprehensive response and that the change of business address led to a delayed awareness of the impugned order, past the appeal deadline.
Despite the petitioner’s initial failure to submit a detailed reply, the High Court was “inclined to grant one more opportunity to the petitioner to put forth their case.” The court emphasized the importance of ensuring a fair hearing and the opportunity for a taxpayer to present their case fully, especially when procedural lapses or communication issues are cited.
In its order, the court stipulated the following conditions:
1. The impugned order dated March 20, 2024, is set aside on the condition that the petitioner deposits 25% of the disputed tax amount for the impugned assessment period, as agreed, within four weeks from the date of receipt of a copy of the court’s order.
2. Following this deposit, the petitioner shall file their detailed reply/objection along with any required documents within two weeks thereafter.
3. Upon receipt of the petitioner’s detailed reply/objection, the respondent is directed to consider the same and issue a clear 14-day notice, fixing a date for a personal hearing. The respondent shall then pass appropriate orders on merits and in accordance with the law, after hearing the petitioner, as expeditiously as possible.
With these directions, the writ petition was disposed of, with no order as to costs. The connected miscellaneous petitions were also closed. This ruling highlights the court’s willingness to balance administrative efficiency with the principles of natural justice, providing taxpayers a second chance to present their case under specific conditions.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
This writ petition has been filed by the petitioner seeking to call for records relating to impugned Order-in-Original 92/2023 dated 20.03.2024 passed by the respondent and quash the same.
2. Mr. A .P. Srinivas, learned Senior Standing Counsel (Taxes), takes notice on behalf of the respondent.
3. By consent of the parties, the main writ petition is taken up for disposal at the admission stage itself.
4. Learned counsel for the petitioner would submit that the petitioner is engaged in the business of trading of Cashew Kernels, Raisin and Toor Dhall. The respondent issued a show cause notice dated 15.12.2023, proposing a demand of Rs.69,62,780/- along with interest and penalty. On receipt of the show cause notice, the petitioner engaged a consultant to file reply for the show cause notice. The consultant has attended the personal hearing on 05.03.2024 and sought time to file a detailed reply. However, the consultant filed a cryptic reply denying the allegations raised in the show cause notice and he has not filed a detailed reply with proper supporting evidence. Therefore, a demand proposed in the show cause notice was confirmed by the respondent vide impugned order dated 20.03.2024.
5. He would further submit that since the petitioner transferred the business place and the impugned order was sent to the registered place of business. Thus, when the petitioner came to know about the impugned order only in the month of August 2024, after the expiry of the appeal period. Therefore, the petitioner could not file an appeal. Therefore, he would submit that the petitioner is ready and willing to pay 25% of the disputed tax demand in respect of the impugned assessment period and prayed to set aside the impugned order directing the respondent to permit the petitioner to file their detailed reply and provide an opportunity of personal hearing so that the petitioner would be able to substantiate their case.
6. Learned Senior Standing Counsel appearing for the respondent would submit that as per the voluntary submissions made by the learned counsel for the petitioner, subject to the deposit of 25% of the disputed tax demand by the petitioner in respect of the impugned assessment period, if the Court feels it appropriate and it is a fit case for re-consideration, this Court may consider and pass orders.
7. Heard the learned counsel appearing for the petitioner as well as the learned Senior Standing Counsel appearing for the respondent and perused the materials available on record.
8. Considering the above submissions made by the learned counsel on either side and upon perusal of the materials, it is evident that the petitioner had failed to file a detailed reply along with supporting documents and therefore, the demand has been confirmed by the respondent. According to the petitioner, the petitioner’s consultant has failed to file a detailed reply along with necessary documents and since the petitioner has transferred his business to some other place, he was not aware of the issuance of impugned order and he came to know about the impugned order after the expiry of the appeal period. Therefore, the the petitioner prays to grant one more opportunity to establish their case before the respondent. Though the petitioner had failed to submit their detailed reply along with necessary documents, in order to grant one more opportunity to the petitioner to put forth their case, this Court is inclined to set aside the impugned order dated 23.03.2024 passed by the respondent. Accordingly, this Court passes the following order:-
i. The order impugned herein is set aside on condition that the petitioner deposits 25% of the disputed tax amount in respect of the impugned assessment period, as agreed by the petitioner, within a period of four weeks from the date of receipt of a copy of this order.
ii. The petitioner shall file their reply/objection along with the required documents, if any, within a period of two weeks thereafter.
(iii) On filing of such reply/objection by the petitioner, the respondent shall consider the same and issue a 14 days clear notice by fixing the date of personal hearing to the petitioner and thereafter, pass appropriate orders on merits and in accordance with law, after hearing the petitioner, as expeditiously as possible.
9. With the above directions, the writ petition is disposed of. There is no order as to costs. Consequently, the connected miscellaneous petitions are closed.
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