Case Law Details
Nakoda Unique Gold Private Limited Vs Assistant Commissioner (ST) (Madras High Court)
The case of Nakoda Unique Gold Private Limited vs. Assistant Commissioner (ST), heard by the Madras High Court, revolves around discrepancies between GSTR 3B returns and auto-populated GSTR 2A. This article delves into the court’s decision to set aside the assessment order due to procedural irregularities and appropriation of tax demand.
The petitioner challenged an assessment order primarily on the grounds of inadequate opportunity to contest the tax demand. A show cause notice issued regarding discrepancies between GSTR 3B returns and auto-populated GSTR 2A remained unanswered, as it was uploaded in an obscure section of the GST portal. Subsequently, the impugned order was issued, appropriating a significant portion of the tax liability from the petitioner’s bank account and electronic credit ledger.
The petitioner’s counsel argued that the discrepancy arose due to misreporting, specifying amounts under the wrong category. The petitioner sought an opportunity to contest the tax demand on merits. The government advocate acknowledged the appropriation but lacked clarity on the recovery from the electronic credit ledger.
The Madras High Court set aside the impugned order and remanded the matter for reconsideration. The petitioner was granted fifteen days to respond to the show cause notice, with the respondent directed to provide a reasonable opportunity for a personal hearing. The outcome of the remanded proceedings would determine the appropriation of amounts towards the tax demand.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
An assessment order dated 22.08.2023 is challenged in this writ petition primarily on the ground that the petitioner did not have a reasonable opportunity to contest the tax demand. A show cause notice dated 05.05.2023 was issued to the petitioner in respect of discrepancies between the petitioner’s GSTR 3B returns and the auto populated GSTR 2A. The petitioner did not reply thereto since the notice was uploaded on the “view additional notices and order” tab of the GST portal. The impugned order was issued thereafter on 22.08.2023.
2. Learned counsel for the petitioner invited my attention to the impugned order and pointed out that the total tax liability, as per the impugned order, of about Rs.10,41,656/- was appropriated partly from the petitioner’s bank account in the SBI and partly from the electronic credit ledger of the petitioner. Since the amount appropriated exceeds the tax liability and represents more than 60% of the total demand, including interest and penalty, learned counsel submits that the petitioner be provided an opportunity to contest the tax demand on merits.
3. Mr.V.Prashanth Kiran, learned Government Advocate, accepts notice for the respondent. On instructions, he confirms appropriation of a sum of Rs.4,78,854/-. However, he submits that he has no instructions with regard to the recovery made from the electronic credit ledger of the petitioner.
4. The petitioner asserts that the discrepancy occurred on account of the petitioner specifying the amount under the row relating to “all other ITC” instead of the row relating to “import of goods”. In paragraph 3 of the affidavit, the petitioner has set out details of amounts appropriated either from the attached bank account or from the electronic credit ledger. The relevant page from the electronic credit ledger has also been placed on record. When the above facts and circumstances are taken into account, it is just and necessary that the petitioner be provided an opportunity to contest the tax demand on merits.
5. Therefore, the impugned order is set aside and the matter is remanded for re-consideration. The petitioner is permitted to submit a reply to the show cause notice within fifteen 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 a fresh order within two months from the date of receipt of the petitioner’s reply. It is made clear that all amounts appropriated towards the tax demand shall abide by the outcome of the remanded proceedings.
6. W.P.No.8847 of 2024 is disposed of on the above terms. No costs. Consequently, W.M.P.Nos.9843 and 9844 of 2024 are closed.
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