Case Law Details
Sri Guberan Steels Vs Assistant Commissioner (ST) (Madras High Court)
The Madras High Court recently delivered a significant judgment in the case of Sri Guberan Steels vs. Assistant Commissioner (ST), addressing assessment orders for the financial years 2019-20, 2020-21, and 2021-22. The petitioner, a registered individual under GST laws, challenged the orders citing the unavailability of crucial documents in their possession. In this article, we will delve into the details of the case, the court’s observations, and the implications of the judgment.
Background of the Case: The petitioner, subject to a surprise inspection, received an intimation in Form DRC-01A and a show cause notice in Form DRC-01. The assessment order was contested, primarily on the grounds that relevant books, e-way bills, and invoices were under the custody of the Central GST authorities. The petitioner, through responses dated 07.01.2023 and 03.07.2023, conveyed the inability to address certain defects due to the unavailability of essential documents.
Key Arguments and Court Observations:
i. Non-Availability of Documents: The petitioner’s counsel argued that the claim related to circular trading could not be substantiated due to the non-availability of relevant documents. The court acknowledged that the petitioner informed the respondent about this issue in their replies and highlighted that subsequent document retrieval could potentially support the genuineness of purchases.
ii. Reasoned Order: The court considered the arguments made by Mr. C. Harsha Raj, the learned Additional Government Pleader, who emphasized that the impugned order was well-reasoned. Notably, certain defects were dropped after considering the petitioner’s responses, indicating a fair evaluation by the assessing authorities.
iii. Impact of Document Retrieval: While the court recognized that the retrieved documents might not affect defect no.1 (pertaining to the difference between GSTR-3B and GSTR-2A), it acknowledged the significant impact on the petitioner’s ability to respond to two out of the three defects. This formed the basis for the court’s decision to intervene.
Court’s Decision and Rationale: The Madras High Court, exercising discretionary jurisdiction, quashed the impugned assessment orders. The court, recognizing the hindrance caused by the unavailability of documents in the custody of the Central GST authority, emphasized the need for the petitioner to respond adequately to the defects. The decision aimed at providing a fair opportunity to the petitioner to present relevant documents and establish the genuineness of purchases.
The court ordered a remand for re-consideration, instructing the petitioner to submit all relevant documents within three weeks of receiving a copy of the judgment. The assessing officer was directed to issue fresh assessment orders within four months after receiving the documents, ensuring a reasonable opportunity for the petitioner.
Implications and Conclusion: The Madras High Court’s decision in Sri Guberan Steels vs. Assistant Commissioner sets a precedent emphasizing the importance of access to relevant documents during GST assessments. The judgment underscores the need for assessing authorities to consider the practical challenges faced by taxpayers in responding to defects and defects and highlights the court’s commitment to ensuring a fair and just evaluation.
In conclusion, the court’s intervention in this case serves as a reminder of the judiciary’s role in safeguarding the rights of taxpayers and promoting a balanced and equitable approach in GST assessments.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
In these three writ petitions, the petitioner assails the assessment order in respect of financial years 2019-20, 2020-21 and 2021-22, respectively. The petitioner states that he is a registered person under applicable GST laws. Pursuant to a surprise inspection, it is stated that the petitioner received an intimation in Form DRC- 01A and a show cause notice in Form DRC-01. The petitioner replied to the intimation by pointing out that the relevant books are not available with the petitioner as regards defect no.2, which pertains to the difference in outward taxable turnover between GSTR-3B, GSTR- 1 and e-way bills. By a subsequent reply dated 03.07.2023 to the personal hearing notice, the petitioner reiterated that the books of accounts, e-way bills and invoices are with the Superintendent, Office of the Assistant Commissioner of GST and Central Excise, Coimbatore Division-II and, therefore, the petitioner is unable to produce documentary evidence in support of movement of goods and payment details. The impugned assessment orders were issued in the above facts and circumstances.
2. Learned counsel for the petitioner invited my attention to the orders impugned herein and pointed out that the claim relating to circular trading could not be dealt with by the petitioner on account of non availability of relevant documents to establish purchase, movement of goods and He also pointed out that the petitioner informed the respondent about such non availability both in reply dated 07.01.2023 and the later reply dated 03.07.2023. By submitting that the petitioner has subsequently received the relevant documents, learned counsel submits that the petitioner should be provided an opportunity to establish that the purchases were genuine.
3. Mr. C. Harsha Raj, learned Additional Government Pleader, accepts notice for the respondent. He submits that the impugned order is a reasoned order issued after taking into consideration the petitioner’s replies. For instance, he points out that the claim made in respect of defect no.3, which pertains to cancellation of e-way bills, was dropped upon consideration of the reply of the petitioner on 07.01.2023 and submissions made during the hearing. He also points out that the receipt of documents that were previously in the custody of the Central GST Authorities would have no bearing as regards defect no.1, which pertains to the difference between GSTR-3B and GSTR-2A. Although the order is a composite order, Mr. C. Harsha Raj, learned Additional Government Pleader, submits that any infirmity therein with regard to specific defects can be more appropriately addressed in a statutory appeal.
4. When reply dated 07.01.2023 and 03.07.2023 are considered cumulatively, it follows that the petitioner informed the respondent that he is unable to reply to defect 2 and the circular trading defect on account of non availability of relevant documents. The impugned order also records that the petitioner could not respond to these defects as a result of non availability of documents. As correctly contended by Mr.C.Harsha Raj, learned Additional Government Pleader, it is likely that these documents may not have a bearing as regards defect no.1. Nonetheless, a composite order of assessment was issued with regard to four defects and the documents on record disclose that the non availability of records, on account of such documents being in the custody of the Central GST authority, undoubtedly impacted the petitioner’s ability to respond to two defects. In exercise of discretionary jurisdiction, I am of the view that interference is warranted in this case because the non availability of documents, for reasons outlined above, impacted two out of the three defects in respect of which an order adverse to the petitioner was issued. Therefore, solely with a view to provide an opportunity to the petitioner to respond to these defects, the impugned order calls for interference.
5. For reasons set out above, the impugned orders are quashed and the matter is remanded for re-consideration. The petitioner shall submit all relevant documents within a maximum period of three weeks from the date of receipt of a copy of this Upon providing a reasonable opportunity to the petitioner after receipt of such documents, the assessing officer shall issue fresh assessment orders within a maximum period of four months thereafter.
6. W. P.Nos.1251, 1255 and 1258 of 2024 are disposed of on the above terms. No costs. Consequently, W.M.P.Nos.1310, 1300, 1301, 1302, 1303, 1307 of 2024 are closed.
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