Case Law Details
Aristo Telemedia Pvt Ltd Vs Assistant Commissioner (ST) (Madras High Court)
The recent judgment of the Madras High Court in the case of Aristo Telemedia Pvt Ltd Vs Assistant Commissioner (ST) addressed significant discrepancies in a GST assessment order. This article delves into the details of the case, highlighting the grounds of challenge, the court’s analysis, and its consequential decision.
The petitioner, Aristo Telemedia Pvt Ltd, contested an assessment order dated 30.12.2023, prompted by a show cause notice issued on 30.05.2023. The notice demanded a sum of Rs. 39,34,549/- towards tax and reversal of input tax credit, which was responded to on 12.08.2023. However, the subsequent assessment order imposed a tax liability of Rs. 1,08,47,012/-, significantly exceeding the initial notice by Rs. 69 lakh.
The petitioner challenged the order on various grounds, including the discrepancy in tax liability and the absence of a personal hearing. The respondent, represented by Mrs. K. Vasanthamala, acknowledged the discrepancy, confirming that the notice initially demanded Rs. 39,34,549/-.
The court observed that the confirmed tax liability in the assessment order substantially exceeded the amount specified in the show cause notice. Moreover, the imposition of tax on “other expenses” based on the petitioner’s profit and loss account raised concerns, particularly regarding the lack of computation at the applicable rate. Additionally, the absence of a personal hearing further undermined procedural fairness.
Consequently, the court set aside the impugned order and remanded the matter for reconsideration. The respondent was directed to afford the petitioner a reasonable opportunity, including a personal hearing, and issue a fresh order within two months.
In conclusion, the judgment of the Madras High Court underscores the importance of procedural fairness and adherence to statutory requirements in GST assessments. The decision provides relief to the petitioner, ensuring a fair opportunity to contest the tax liability.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
An assessment order dated 30.12.2023 is the subject of challenge in this writ petition.
2. The petitioner received a show cause notice dated 30.05.2023 in relation to a demand for a sum of Rs.39,34,549/- towards tax and reversal of input tax credit. The said show cause notice was replied to on 12.08.2023. Eventually, the impugned order dated 30.12.2023 was issued.
3. Learned counsel for the petitioner challenged the impugned order on multiple grounds. The first ground of challenge was that the total demand under the show cause notice was for a sum of Rs.39,34,549/-, whereas the tax liability imposed under the impugned order is Rs.1,08,47,012/-. The next contention was that this discrepancy has arisen largely on account of imposing tax on “other expenses” by taking the figure from the profit and loss account of the petitioner. In this connection, learned counsel also pointed out that the total expenses indicated in the profit and loss account is Rs.48,53,977/- and the respondent treated this as the amount of tax to be paid instead of computing tax at the applicable rate on the above sum. The third contention was that no personal hearing was offered before the impugned order was issued.
4. Mrs. K. Vasanthamala, learned Government Advocate, accepts no-tice on behalf of the respondent. After obtaining instructions with regard to the show cause notice, she confirms that the notice called upon the petitioner to show cause as to why the tax demand of Rs.39,34,549/- should not be confirmed.
5. On comparing the show cause notice with the impugned order, it is clear that the confirmed tax liability of Rs.1,08,47,012/-under the impugned order exceeds the amount specified in the show cause notice substantially. As a consequence, the petitioner was deprived of an opportunity to show cause against the amount eventually confirmed as the petitioner’s liability. It is also noticeable from the impugned order that it was concluded therein that tax of Rs.48,53,977/- is payable by the petitioner towards other expenses. This sum of Rs.48,53,977/- appears to be the total amount indicated in Note 19 of the profit and loss account of the petitioner for the year ended 31.03.2020. Even if tax liability is imposable with regard to ‘other expenses’, the said amount cannot be treated as the tax liability of the petitioner. It also appears that no personal hearing was provided to the petitioner. For all these reasons, the impugned order cannot be sustained.
6. Therefore, the impugned order dated 30.12.2023 is set aside and the matter is remanded for reconsideration. 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 a copy of this order. All contentions are left open to the petitioner in course of remanded proceedings.
7. W. P.No.9067 of 2024 is disposed of on the above terms. No costs. Consequently, W.M.P.Nos.10077 and 10079 of 2024 are closed.
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