Case Law Details
K.C. Mathaiyan Vs Assistant Commissioner (ST) (Madras High Court)
The Madras High Court recently addressed the plea of K.C. Mathaiyan against the Assistant Commissioner concerning GST demands. The court intervened, providing Mathaiyan with another opportunity to contest the tax demands on merit, setting aside the respective impugned orders.
In both writ petitions, Mathaiyan challenged the orders citing lack of reasonable opportunity to contest the tax demands. He asserted his status as a works contractor executing civil work for government departments and local authorities. Mathaiyan received intimation and show cause notices regarding alleged discrepancies between the GSTR 1 and 3B returns compared to the GSTR 2A return. Despite making payments towards tax liabilities and appearing before the respondent, Mathaiyan was not heard before the issuance of impugned orders. Hence, he sought another chance to contest the tax demands on merit.
During the proceedings, Mathaiyan’s counsel highlighted that the entire tax liability for the assessment period 2019-2020 was discharged, and over 50% of the liability for the assessment period 2021-22 was settled. Acknowledging Mathaiyan’s efforts to fulfill tax obligations, the court deemed it just and appropriate to grant him another opportunity to contest the tax demands, interest, and penalties on merit.
Consequently, the impugned orders dated 20th April 2023 and 21st November 2023 were set aside, and the matters were remanded to the respondent for reconsideration. Mathaiyan was granted 15 days to submit a reply to the show cause notice, following which the respondent was directed to provide a reasonable opportunity, including a personal hearing, and issue fresh orders within two months.
In conclusion, the writ petitions (W.P.Nos.9090 & 9093 of 2024) were disposed of under the mentioned terms, without incurring any costs. Consequently, connected miscellaneous petitions were closed.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
In both these writ petitions, the respective impugned orders are challenged on the ground that the petitioner did not have a reasonable opportunity to contest the tax demand on merits.
2. The petitioner asserted that he is a works contractor executing civil work for government departments and local authorities. The petitioner received an intimation and show cause notice in relation to alleged discrepancies between the GSTR 1 and 3B returns, on the one hand, and the GSTR 2A return on the other. According to the petitioner, he appeared in person before the respondent and also made payments towards the tax liability from time to time. Since the petitioner was not heard before the impugned orders were issued, the petitioner seeks another opportunity to contest the tax demand on merits.
3. Learned counsel for the petitioner submits that the entire tax liability of Rs.28,73,618/- towards assessment period 2019-2020 was discharged by remitting an aggregate amount of Rs.28,88,000/-. As regards the assessment period 2021-22, he submits that a sum of Rs.11,76,790/- was remitted as against the total tax liability of Rs.22,84,564/-. Therefore, he submits that more than 50% was remitted as regards the assessment period 2021-22 and 100% as regards the assessment period 2019-2020.
4. The impugned orders were issued without hearing the petitioner. Without doubt, the petitioner cannot be absolved of responsibility in such regard inasmuch as both an intimation and show cause notice were issued to the petitioner. At the same time, it should be noticed that the petitioner has discharged the entire tax liability with regard to the financial year 2019-20 and about 50% of the tax liability as regards the financial year 2021-22. To that extent, revenue interest is protected. In these circumstances, it is just and appropriate to provide another opportunity to the petitioner to contest the tax demand, interest and penalty on merits.
5. Solely for that reason, the impugned orders call for interference. Therefore, impugned orders dated 20.04.2023 and 21.11.2023, respectively, are set aside and these matters are remanded to the respondent for reconsideration. The petitioner is permitted to submit a reply to the show cause notice within 15 days from the date of receipt of a copy of this order. Upon receipt thereof, the respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue fresh orders within two months from the date of receipt of the petitioner’s reply.
6. W.P.Nos.9090 & 9093 of 2024 are disposed of on the above terms. No costs. Consequently, connected miscellaneous petitions are closed.
Author Bio
