Case Law Details
Crystal Granites Vs Assistant Commissioner (ST) (Madras High Court)
Crystal Granites filed a writ petition before the Madras High Court challenging an order dated 05.01.2024 issued by the Assistant Commissioner (ST) under Section 74 of the Goods and Services Tax (GST) enactments. The crux of the challenge was the alleged violation of principles of natural justice in the conduct of proceedings leading to the issuance of the impugned order.
The petitioner contended that they were not adequately informed about the show cause notice and subsequent proceedings. They argued that the notice and order were solely uploaded on the GST portal under the “view additional notices and order” tab, without any additional communication via other means. This, according to the petitioner, deprived them of a reasonable opportunity to respond and participate effectively in the adjudication process.
In response, the learned counsel for Crystal Granites submitted that the proceedings were also flawed because they did not satisfy the conditions stipulated under Section 74 of the GST enactments. Specifically, they asserted that the tax demand in question arose from discrepancies between the petitioner’s GSTR 3B returns and the auto-populated GSTR 2A, and contended that these discrepancies did not warrant the issuance of the impugned order.
During the hearing, Mr. V. Prasanth Kiran, representing the Government, acknowledged the receipt of notice and defended the issuance of the impugned order. He argued that a show cause notice had indeed been issued to Crystal Granites, followed by a personal hearing offered in November 2023. He further maintained that the order was well within the statutory provisions of Section 74, thus refuting the petitioner’s claim that the proceedings were time-barred.
Upon perusing the impugned order and considering the arguments presented, the Madras High Court found merit in Crystal Granites’ contention regarding the lack of proper communication and procedural fairness. The court observed that the tax proposals were confirmed due to the petitioner’s failure to respond to the show cause notice or attend the personal hearing. Despite setting aside the order, the court imposed a condition requiring Crystal Granites to remit 10% of the disputed tax demand within two weeks.
Additionally, the court granted Crystal Granites the opportunity to submit a comprehensive reply to the show cause notice within the stipulated timeframe. Once the remittance was confirmed, the tax authority was directed to conduct a fresh assessment and issue a revised order within three months. The court emphasized that this process should include a fair opportunity for the petitioner to present their case and address all legal contentions, including those pertaining to the issue of limitation.
In conclusion, the writ petition W.P.No.12540 of 2024 filed by Crystal Granites was disposed of with the above directions.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
An order in original dated 05.01.2024 is assailed primarily on the ground of breach of principles of natural justice. By asserting that the show cause notice and impugned order were uploaded on the “view additional notices and order tab of the GST portal” and not communicated to the petitioner through any other mode, the present writ petition was filed.
2. Learned counsel for the petitioner submits that the petitioner was deprived of a reasonable opportunity on account of not being aware of the show cause notice. He further submits that the ingredients of Section 74 of applicable GST enactments are not satisfied in the present case and that the proceedings are barred by limitation. Without prejudice, on instructions, he submits that the petitioner agrees to remit 10% of the disputed tax demand as a condition for remand.
3. Mr. V. Prasanth Kiran, learned Government Advocate, accepts notice for the respondent. He points out that the impugned order was preceded by a show cause notice and that a personal hearing was offered to the petitioner in November 2023. He further submits that the impugned order was issued under Section 74 of applicable GST enactments and, therefore, proceedings are not barred by limitation.
4. On perusal of the impugned order, it is evident that the tax proposal pertains to mismatches between the GSTR 3B returns of the petitioner and the auto populated GSTR 2A. Such tax proposals were confirmed because the petitioner failed to reply to the show cause notice or attend the personal hearing. Upon considering the facts and circumstances, the interest of justice warrants that the petitioner be provided an opportunity to contest the tax demand on merits, albeit by putting the petitioner on terms.
5. For reasons set out above, the impugned order dated 05.01.2024 is set aside, subject to the condition that the petitioner remits 10% of the disputed tax demand as agreed to within a maximum period of two weeks from the date of receipt of a copy of this order. Within the aforementioned period, the petitioner is also permitted to submit a reply to the show cause notice. Upon receipt thereof 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 assessment order within a period of three months from the date of receipt of the petitioner’s reply. It is made clear that all contentions are left open to the petitioner, including the contention on limitation.
6. W.P.No.12540 of 2024 is disposed of on the above terms. No costs. Consequently, W.M.P.Nos.13689 and 13691 of 2024 are closed.
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