Case Law Details
Newlab F Apparels LLP Vs Assistant Commissioner (ST)(FAC) (Madras High Court)
In a recent judgment by the Madras High Court, a taxpayer, Newlab F Apparels LLP, challenged an assessment order dated 25th October 2023, citing lack of reasonable opportunity to contest the tax demand. The petitioner, engaged in the retail and wholesale trading of leather apparels, argued that they were unaware of the proceedings due to reliance on a GST compliance consultant who failed to inform them about the notices issued by the tax authorities.
The dispute arose when the petitioner received a notice in Form ASMT 10 on 16th June 2023, followed by an intimation on 10th May 2023, and a show cause notice on 7th August 2023. The petitioner, claiming unfamiliarity with GST compliance procedures, alleged discrepancies in the amounts specified in the notices and the subsequent order.
The petitioner, through their counsel, contended that the limited liability partnership was established in 2019, and thus, they were not well-versed with GST compliance procedures. Additionally, they highlighted disparities between the amounts mentioned in the ASMT 10 notice and those in the show cause notice and the final order. As a gesture of cooperation, the petitioner expressed willingness to remit 10% of the disputed tax demand.
The Government Advocate, representing the first respondent, argued that the petitioner had been provided ample opportunities to contest the tax demand, as evident from the impugned order.
Upon examining the documents and considering the arguments presented, the Court observed that the tax demand pertained to a discrepancy between the petitioner’s GSTR 3B returns and the auto-populated GSTR 2A. While acknowledging the petitioner’s responsibility as a registered entity under GST laws, the Court deemed it fair to provide an opportunity for the petitioner to explain the discrepancy.
Consequently, the impugned order dated 25th October 2023 was set aside, subject to the condition that the petitioner remits 10% of the disputed tax demand within two weeks from receiving a copy of the order. Simultaneously, the petitioner was allowed to submit a reply to the show cause notice dated 7th August 2023 within the same period. Once the petitioner’s reply and the remitted amount were received, the first respondent was directed to provide a reasonable opportunity, including a personal hearing, and subsequently issue a fresh order within two months.
As a result of setting aside the assessment order, the bank attachment initiated against the petitioner was lifted.
In conclusion, the Madras High Court’s decision in the case of Newlab F Apparels LLP Vs Assistant Commissioner reflects a balanced approach, ensuring fair treatment to the taxpayer while upholding the principles of tax compliance. This judgment serves as a reminder of the importance of procedural fairness and the need for effective communication between taxpayers and tax authorities in resolving disputes.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
An assessment order dated 25.10.2023 is challenged on the ground that the petitioner did not have a reasonable opportunity to contest the tax demand. The petitioner is engaged in the business of retail and wholesale trading of leather apparels. Upon scrutiny of the petitioner’s returns, a notice in Form ASMT 10 was issued to the petitioner on 16.06.2023. Thereafter, an intimation dated 10.05.2023 and a show cause notice dated 07.08.2023 followed. The petitioner asserts that he was unaware of these proceedings because a consultant was engaged for GST compliances and such consultant did not inform the petitioner about these proceedings. The present writ petition was filed after a bank attachment notice was issued on 13.03.2024.
2. Learned counsel for the petitioner submits that the limited liability partnership was established in 2019 and that the petitioner was not acquainted with procedures relating to GST compliances. Learned counsel also submits that there is disparity between amounts specified in the ASMT 10 notice when compared with amounts specified in the show cause notice and the impugned order. On instructions, learned counsel submits that the petitioner is willing to remit 10% of the disputed tax demand as a condition for remand.
3. Mr. V. Prashanth Kiran, learned Government Advocate, accepts notice for the first respondent. He submits that the petitioner was provided multiple opportunities to contest the tax demand and that this is evident from the impugned order.
4. The documents on record include the notice in Form ASMT 10, the intimation and the show cause notice. As a registered person under applicable GST enactments, the explanation of the petitioner that he was unaware of proceedings is not convincing. However, on perusal of the impugned order, it appears that the tax demand pertains to discrepancy between the petitioner’s GSTR 3B returns and the auto populated GSTR 2A. It is just and appropriate that the petitioner be provided an opportunity to explain the discrepancy after putting the petitioner on terms.
5. Therefore, the impugned order dated 25.10.2023 is set aside subject to the condition that the petitioner remits 10% of the disputed tax demand within two weeks from the date of receipt of a copy of this order. Within the same period, the petitioner is permitted to submit a reply to the show cause notice dated 07.08.2023. Upon receipt of the petitioner’s reply and upon being satisfied that 10% of the disputed tax demand was received, the first respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within two months from the date of receipt of the petitioner’s reply. As a consequence of the impugned assessment order being set aside, the bank attachment is raised.
6. W.P.No.8496 of 2024 is disposed of on the above terms. No costs. Consequently, W.M.P.Nos.9444, 9446 and 10118 of 2024 are closed.
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