Case Law Details
Abishek Suppliers Vs Commercial Tax Officer (Madras High Court)
Introduction: In a recent ruling, the Madras High Court addressed the issue of a mismatch between GSTR 1 statements and GSTR 3B returns in the case of Abishek Suppliers vs. Commercial Tax Officer. The court’s decision highlighted procedural lapses and underscored the importance of adhering to principles of natural justice. The court granted Abishek Suppliers an opportunity to be heard on the merits of the case, conditional upon a 10% pre-deposit of the disputed tax demand.
Background and Case Details: Abishek Suppliers faced an adverse order dated April 16, 2024, after failing to upload a reply to a show cause notice issued on December 14, 2023. The notice demanded an explanation for discrepancies between the GSTR 1 statement and GSTR 3B return. The petitioner, represented by their learned counsel, argued that the mismatch occurred due to an inadvertent error: only the transactions for November and December 2017 were uploaded in GSTR 1, while GSTR 3B included all transactions. The petitioner sought additional time to explain the disparity but failed to upload the response due to technical issues.
Court Proceedings and Arguments: During the proceedings, the petitioner’s counsel emphasized the unintentional nature of the error and the need for a fair opportunity to clarify the mismatch. The petitioner agreed to remit 10% of the disputed tax demand as a pre-condition for remand.
The respondent, represented by Mrs. K. Vasanthamala, argued that natural justice was followed, citing the issuance of the show cause notice and the subsequent order. She maintained that the petitioner had been given sufficient time to respond.
Judgment and Reasoning: The Madras High Court examined the impugned order and noted that the tax proposal was confirmed solely due to the petitioner’s failure to reply. The court recognized the procedural oversight and the petitioner’s willingness to comply with the pre-deposit condition. The court stated that in the interest of justice, the petitioner should be allowed to contest the tax demand on merits.
Key Directives from the Court:
1. Setting Aside the Impugned Order: The court set aside the order dated April 16, 2024, contingent upon the petitioner depositing 10% of the disputed tax within two weeks.
2. Opportunity to Submit a Reply: The petitioner was granted the chance to submit a reply to the show cause notice within the specified period.
3. Personal Hearing and Fresh Order: Upon receipt of the reply and confirmation of the pre-deposit, the respondent was directed to provide a reasonable opportunity for a personal hearing before issuing a fresh order within three months.
Conclusion: The Madras High Court’s ruling in the case of Abishek Suppliers vs. Commercial Tax Officer underscores the judiciary’s commitment to ensuring fair treatment and upholding natural justice principles in tax disputes. By granting a hearing opportunity and emphasizing procedural compliance, the court has set a significant precedent for handling GSTR mismatches and related disputes. This decision not only provides relief to Abishek Suppliers but also serves as a critical reminder for tax authorities and taxpayers to ensure due process is followed in tax adjudication.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
An order in original dated 16.04.2024 is challenged on the ground that the petitioner was unable to upload the reply to the show cause notice. The petitioner received a show cause notice dated 14.12.2023 calling upon the petitioner to explain the disparity between the GSTR 1 statement and the GSTR 3B return. By reply dated 12.01.2024, the petitioner requested for time. According to the petitioner, she could not upload the reply to the show cause notice thereafter.
2. Learned counsel for the petitioner submits that the mismatch occurred because the petitioner inadvertently uploaded only the November and December 2017 transactions in the GSTR 1 statement, whereas the GSTR 3B return recorded all transactions. If provided an opportunity, she submits that the petitioner would be in a position to explain the disparity. On instructions, learned counsel submits that the petitioner agrees to remit 10% of the disputed tax demand as a condition for remand.
3. Mrs. K.Vasanthamala, learned Government Advocate, accepts notice for the respondent. She points out that principles of natural justice were complied with by issuing show cause notice dated 14.12.2023 and issuing the impugned order about three months after the petitioner’s reply dated 12.01.2024 requesting for one month time.
4. On examining the impugned order, it is evident that the tax proposal, which pertains to the mismatch between the petitioner’s GSTR 1 and 3B, was confirmed solely because the tax payer failed to reply to the show cause notice. In the facts and circumstances outlined above, the interest of justice warrants that an opportunity be provided to the petitioner to contest the tax demand on merits by putting the petitioner on terms.
5. For reasons set out above, the impugned order dated 16.04.2024 is set aside 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 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, the respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within a period of three months from the date of receipt of the petitioner’s reply.
6. The writ petition is disposed of on the above terms without any order as to costs. Consequently, connected miscellaneous petitions are closed.
Author Bio
