Case Law Details
Tile Bros Vs Assistant Commissioner (ST) (Madras High Court)
In a recent ruling, the Madras High Court addressed the case of Tile Bros versus the Assistant Commissioner (ST). The issue at hand involved the failure of the Assistant Commissioner to follow the principles of natural justice while issuing a tax demand order. The petitioner, Tile Bros, challenged the original order dated August 31, 2023, on grounds of improper communication and lack of detailed information in the show cause notice.
The core of the dispute lies in the procedural lapses observed by the court. Tile Bros contended that the impugned order, as well as prior communications, were only uploaded to the GST portal and not properly conveyed to the petitioner through other means. This led to the petitioner being unaware of the proceedings, thereby violating the principles of natural justice.
1. Communication Failures: The petitioner argued that the intimation, show cause notice, and the final impugned order were only made available on the “View Additional Notices and Orders” tab on the GST portal. The lack of direct communication hindered the petitioner from responding appropriately.
2. Inadequate Details in Show Cause Notice: The petitioner’s counsel pointed out the absence of specific details regarding the tax proposal in the show cause notice. This lack of clarity further contributed to the petitioner’s inability to prepare an adequate response.
3. Payment and Tax Liability: The petitioner had paid Rs.90,000 towards the tax liability after the impugned order was issued. However, the respondent’s counsel did not have instructions regarding this payment. The court noted that the petitioner’s electronic credit ledger showed a debit of this amount, indicating the payment was indeed made.
4. Court’s Observations and Directions: Upon reviewing the impugned order, the court observed that the tax proposal was confirmed due to the petitioner’s non-response to the show cause notice and absence at the personal hearing. The court recognized the petitioner’s claim and found merit in providing another opportunity for a fair hearing.
The court directed that the impugned order be treated as a show cause notice. Tile Bros was allowed to submit a reply within two weeks of receiving the court’s order. Additionally, if the respondent verified the Rs.90,000 payment towards the tax liability, a personal hearing would be arranged, and a fresh order would be issued within three months.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
An order in original dated 31.08.2023 is challenged on the ground of breach of principles of natural justice.
2. The petitioner asserts that he was unaware of proceedings culminating in the impugned order because the intimation, show cause notice and impugned order were uploaded on the “View Additional Notices and Orders” tab on the GST portal and not communicated to the petitioner through any other mode.
3. Learned counsel for the petitioner referred to the show cause notice and pointed out that no details are contained in the show cause notice with regard to the particulars of the tax proposal. She also points out that pursuant to the impugned order the petitioner has paid a sum of Rs.90,000/- towards the tax liability and that this amount is more than 10% of the disputed tax demand. If provided another opportunity, learned counsel submits that the petitioner would be in a position to explain the mismatch between the GSTR 3B returns and GSTR 2A.
4. Mr. C. Harsha Raj, learned Additional Government Pleader, accepts notice for the respondent. He submits that he does not have instructions with regard to the payment of Rs.90,000/- by the petitioner after the impugned order was issued.
5. On perusal of the impugned order, it is evident that the tax proposal was confirmed because the petitioner did not respond to the show cause notice or attend the personal hearing. The petitioner has placed on record proof that the petitioner’s electronic credit ledger was debited to the extent of 90,000/-. Since learned Additional Government Pleader does not have instructions in this regard, the respondent may verify whether such payment was towards the tax liability under the impugned order. Subject to such verification, the interest of justice warrants that an opportunity be provided to the petitioner.
6. For reasons set out above, W.P.No.1 1674 of 2024 is disposed of by directing that the impugned order dated 31.08.2023 be treated as a show cause notice. The petitioner is permitted to submit a reply in respect thereof within a period of two weeks from the date of receipt of a copy of this order. Upon receipt of the petitioner’s reply and upon being satisfied that the petitioner has remitted a sum of Rs.90,000/- towards the tax liability, the respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within three months from the date of receipt of the petitioner’s reply. In case it is found that the remittance made by the petitioner is not towards the tax demand under the order impugned herein, reconsideration by the respondent will be subject to the petitioner remitting 10% of the disputed tax demand.
7. The writ petition is disposed of on the above terms without any order as to costs. Consequently, connected miscellaneous petitions are closed.
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