Zama & Co. Vs Deputy State Tax Officer (Madras High Court)
Madras High Court in Zama & Co. vs. Deputy State Tax Officer quashed GST demand orders for violating natural justice and failing to consider rectifications made in subsequent GSTR-3B filings. The petitioner challenged orders dated April 23, 2024, May 10, 2024, and August 27, 2024, arguing that the tax demand was incorrect since the alleged excess Input Tax Credit (ITC) had already been rectified in later returns. The petitioner cited an inability to respond promptly to the initial DRC-01 notice due to the illness of their authorized representative. Despite later submitting rectification applications with supporting documents, the tax authority rejected them without a hearing.
The respondent argued that the petitioner failed to respond to multiple notices and reminders before the demand orders were issued. However, the court found that the orders lacked due consideration of the rectifications made and dismissed the applications summarily. The judgment emphasized that ignoring such rectifications and denying a hearing amounted to a breach of the principles of natural justice.
Right to be heard is fundamental in tax matters. The court in the present case applied these principles, holding that administrative decisions must be based on reasoned application of law.
