Case Law Details
Tvl. Sri Sai Company Vs State Tax Officer (Madras High Court)
Madras High Court Directs Tax Department to Furnish Verification Report, Declines to Quash GST Show Cause Notice
Madras High Court has opted not to quash show cause notices (SCNs) issued to Tvl. Sri Sai Company, a container transport business, but has instead directed the tax authorities to provide the petitioner with a copy of the verification report that formed the basis of the notices. The ruling emphasizes the principles of natural justice, ensuring the assessee has a fair opportunity to respond to the allegations before further proceedings.
Tvl. Sri Sai Company, engaged in container transport, operates from No.187/238, Royapettah High Road, Mylapore, Chennai. On October 8, 2024, the Joint Commissioner, Chengalpattu Intelligence Division, conducted an inspection. The petitioner asserts that the nature of their services was explained, and relevant GST returns and documents were submitted, concluding the inspection without incident.
Subsequently, on March 26, 2025, the petitioner received show cause notices proposing a substantial penalty under Section 122 of the Tamil Nadu Goods and Services Tax (TNGST) Act. These notices were based on an alleged verification conducted on August 23, 2024. The core of the petitioner’s grievance was that they were neither provided with a copy of this crucial verification report nor afforded an opportunity to respond to its contents. Furthermore, the petitioner contended that no such verification even took place on the stated date.
The counsel for Tvl. Sri Sai Company argued that the failure to furnish the verification report violated the fundamental principles of natural justice, as it prevented the petitioner from effectively replying to the show cause notices. The writ petitions were filed seeking to quash these impugned SCNs and to direct the issuance of proper notices.
After hearing both the petitioner’s counsel and the learned Government Advocate, the High Court determined that outright quashing the show cause notices at this stage would not be the most appropriate course of action. Instead, the court decided to direct a procedural rectification to ensure fairness.
The court has ordered Tvl. Sri Sai Company to submit a representation to the second respondent (Assistant Commissioner State Tax) within two weeks of receiving the court order, specifically requesting a copy of the verification report dated August 23, 2024. Upon receipt of this representation, the tax department is mandated to provide the verification report to the petitioner within an additional two weeks. Once in possession of the report, the petitioner must then submit a detailed reply to the show cause notices within two weeks.
The writ petitions were disposed of with these specific directions, and no costs were imposed. This judgment reiterates the judiciary’s role in balancing the state’s power to assess taxes with the taxpayer’s right to due process, ensuring transparency and a fair opportunity to respond to allegations, which are hallmarks of natural justice in administrative proceedings.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
These writ petitions have been filed for the issuance of a writ of certiorarified mandamus calling for the records pertaining to the impugned show cause notices dated 26.03.2025 issued by the first respondent and to quash the same and consequently direct the first respondent to issue proper show-cause notice.
2. The petitioner is the proprietor of Tvl. Sri Sai Company (GSTIN: 33AADPK7813QIZD). The petitioner company is engaged in the business of container transport. Due to the size of the containers, they are parked separately while the operations were managed by the petitioner company at No.187/238, Roy pettah High Road, Myla pore, Chennai. While so, on 08.10.2024, the Joint Commissioner, Chengalpattu Intelligence Division conducted an inspection and the petitioner duly explained the nature of services and also submitted relevant GST returns and documents and the inspection was concluded without any incident. Subsequently, the petitioner received show-cause notices dated 26.03.2025 proposing huge penalty under Section 122 of the TNGST Act based on the alleged verification on 23.08.2024. The petitioner was neither given a copy of the verification report nor afforded an opportunity to respond. According to the petitioner, no such verification took place on 23.08.2024, and the impugned show-cause notices were issued in violation of principles of natural justice and hence, the petitioner was constrained to file the above writ petitions.
3. The learned counsel for the petitioner submitted that the petitioner was not furnished with the copy of the verification report and therefore, the petitioner had no effective opportunity to reply to the show-cause notices. The learned counsel submitted that the failure to furnish a copy of the verification report violated the principles of natural justice.
4. With the consent of both counsels, the main writ petition is taken up for final disposal.
5. Heard the learned counsel for the petitioner and learned Government Advocate appearing for the respondents.
6. Considering the submissions made on either side, I am of the view that instead of setting aside the show-cause notices, it would be appropriate to direct the petitioner to submit a representation to the second respondent seeking a copy of the verification report dated 23.08.2024, based on which, the impugned show-cause notices were issued. The petitioner is directed to give a representation to the second respondent, within a period of two weeks from the date of receipt of a copy of this order and on receipt of such representation, a copy of the verification report shall be given to the petitioner within a period of two weeks thereafter. The petitioner on receipt of verification report, shall submit a reply to the show-cause notices within a period of two weeks.
7. The writ petitions are disposed of with the above directions.
No costs. Consequently, connected miscellaneous petitions are closed.
Author Bio
