Case Law Details
Tvl. Annai Packs Vs State Tax Officer (Madras High Court)
The case of Tvl. Annai Packs vs State Tax Officer presented a significant issue before the Madras High Court concerning the boundaries of tax orders and show cause notices (SCN) under GST law. The petitioner, Tvl. Annai Packs, challenged an order dated December 28, 2023, arguing it extended beyond the issues raised in the original SCN.
Background of the Case: The controversy began with a notice in Form ASMT issued on November 30, 2022, followed by an intimation on April 28, 2023. Subsequently, a show cause notice dated August 12, 2023, required Tvl. Annai Packs to explain a discrepancy of Rs. 2063/- between their GSTR-3B returns and the auto-populated GSTR-2A. The petitioner complied and paid the specified amount. However, the impugned order dated December 28, 2023, not only reaffirmed the excess ITC claim but also introduced a new liability concerning discrepancies in the turnover reported in the annual return. This additional liability was not mentioned in the original SCN, leading the petitioner to contest the order.
Petitioner’s Argument: The petitioner, represented by their counsel, argued that the impugned order was unsustainable because it introduced a new defect (defect no. 2) that was not part of the initial SCN. According to the petitioner, this violated the principles of natural justice, as they were not given an opportunity to respond to the new allegation before the liability was imposed.
Respondent’s Argument: The Additional Government Pleader, representing the respondent, acknowledged the petitioner’s payment towards the first defect. However, regarding the second defect, the respondent suggested treating the impugned order as a fresh SCN. This approach would allow the petitioner to respond to the new liability claim, thereby ensuring due process.
Court’s Decision: The High Court, upon reviewing the case, found merit in the petitioner’s argument. It agreed that defect no. 2 was not mentioned in the original SCN, rendering the impugned order unsustainable concerning the new liability. The court emphasized that imposing additional liabilities without prior notice and the opportunity to respond violates the principles of natural justice. However, to balance fairness and administrative efficiency, the court directed that the impugned order be treated as a fresh SCN for defect no. 2. The petitioner was granted fifteen days to submit a reply. The court further instructed the respondent to provide a reasonable opportunity for the petitioner to be heard, including a personal hearing, before issuing a new order within three months from receiving the petitioner’s response.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
The petitioner assails an order dated 28.12.2023 on the ground that it travels beyond the scope of the show cause notice. Pursuant to notice in Form ASMT dated 30.11.2022 and an intimation dated 28.04.2023, show cause notice dated 12.08.2023 was issued to the petitioner calling upon the petitioner to show cause as to why a sum of Rs.2063/- towards the difference between the petitioner’s GSTR 3B returns and the auto populated GSTR 2A is not payable by the petitioner. Pursuant thereto, the said sum was paid by the petitioner. ese circumstances, impugned order dated 28.12.2023 was issued tax liability was imposed not only in respect of the above mentioned excess ITC claim but also with regard to a difference in the turnover reported in the annual return of the petitioner.
2. Learned counsel for the petitioner referred to the show cause notice and the impugned order and pointed out that defect no.2 finds no place in the show cause notice. As a consequence, he contends that the impugned order is unsustainable.
3. Mr. C. Harsha Raj, learned Additional Government Pleader, accepts notice for the respondent. He points out that the petitioner remitted the amount due towards defect no.1 in the order. As regards defect no.2, he submits that the order may treated as a show cause notice so as to provide an opportunity to the petitioner. This request is opposed by learned counsel for the petitioner, who contends that a fresh show cause notice should be issued.
4. On comparing the impugned order with the show cause notice, the contention of learned counsel for the petitioner that the show cause notice did not deal with defect no.2 is liable to be Therefore, the impugned order is unsustainable as regards defect no.2. Nonetheless, as long as the petitioner is provided an opportunity to respond to the issue raised in the order by treating it is a show cause notice, no prejudice would be caused. While submitting such reply, it is however necessary that all contentions be left open to the petitioner.
5. For reasons set out above, W.P.No.15478 of 2024 is disposed of by directing that the impugned order be treated as a show cause notice as regards defect no.2. The petitioner is permitted to submit a reply thereto within fifteen days from the date of receipt of a copy of this order. While submitting such reply, all conditions are left open to the petitioner. Upon receipt of the petitioner’s reply, the ndent is directed to provide a reasonable opportunity to the oner, including a personal hearing, and thereafter issue a fresh order within three months from the date of receipt of the petitioner’s reply. No costs. Consequently, W.M.P.Nos.16834 and 16835 of 2024 are closed.
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