Case Law Details
Santhinarayanan Santhoshkumar Vs Deputy State Tax Officer-1 (Madras High Court)
In a notable judgment, the Madras High Court has remanded a GST demand order against Santhinarayanan Santhoshkumar, a grocery shop owner, with a Rs. 1.5 lakh pre-deposit condition. This decision follows discrepancies identified between various GST returns, leading to substantial tax demands. The Court’s ruling provides the petitioner with an opportunity to contest the demands under specific conditions, highlighting the judicial approach to resolving GST disputes.
Background of the Case
Santhinarayanan Santhoshkumar faced GST demands arising from discrepancies between his GSTR-1, GSTR-2A, and GSTR-3B returns. The total confirmed liabilities amounted to Rs. 6,85,497, broken down as follows:
- Difference in GSTR-1 vs GSTR-3B:
- SGST: Rs. 12,581
- CGST: Rs. 12,581
- Penalty: Rs. 20,000
- Interest: Rs. 19,222
- Difference in GSTR-2A vs GSTR-3B:
- Tax Balance: Rs. 2,93,808
- Penalty Balance: Rs. 29,381
- Interest Balance: Rs. 2,24,437
The discrepancies were significant, with a total tax balance of Rs. 3,06,389, and interest and penalty balances adding up to Rs. 2,73,429.
Petitioner’s Arguments
The petitioner, running a small grocery shop, argued that the GST notices were not adequately addressed due to technical issues with the GST portal and that the petitioner did not have the means to respond effectively. Given the substantial nature of the demand, the petitioner requested an opportunity to explain the case and appeal the order.
Government’s Opposition
The Government Advocate contended that the petition was time-barred and should be dismissed based on precedents set by the Supreme Court in similar cases. The argument focused on the petitioner’s delay in challenging the order and the statutory limitations for filing appeals under Section 107 of the GST Act.
Court’s Decision
The Madras High Court considered both sides’ arguments and decided to grant partial relief to the petitioner. The Court quashed the impugned GST demand order and remanded the case for a fresh review. However, the petitioner was required to deposit Rs. 1.5 lakh into the respondent’s account as a pre-deposit condition.
The Court’s ruling stipulated that the quashed order should be treated as an addendum to the original show cause notice. The petitioner was directed to file a reply to this notice within 30 days from receiving the Court’s order, along with the pre-deposit amount. The respondent was instructed to issue a fresh order based on the merits of the case within three months of the appeal’s filing, ensuring that the petitioner would be given a fair hearing.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
Heard learned counsel for the petitioner and learned Government Advocate for the respondent.
2. The petitioner is before this Court long after the impugned order was passed in GST DRC 07 dated 16.08.2023 bearing reference No.ZD330823089251E.
3. It is noticed that the amount that has been confirmed against the petitioner towards tax liability, on account of the difference between GSTR 01 and GSTR 3B and also between GSTR 2A and GSTR 3B as follows:
| Difference in GSTR 1 vs GSTR 3B | Description | SGST (in Rs.) | CGST (in Rs.) |
| Tax Balance | 12,581 | 12,581 | |
| Penalty Balance | 10,000 | 10,000 | |
| Interest Balance | 9,611 | 9,611 | |
| Difference in GSTR 2A vs GSTR 3B | Tax Balance | 2,93,808 | 2,93,808 |
| Penalty Balance | 29,381 | 29,381 | |
| Interest Balance | 2,24,437 | 2,24,437 | |
| Total | Total Tax Balance | 3,06,389 | 3,06,389 |
| Total Penalty Balance | 39,381 | 39,381 | |
| Total Interest Balance | 2,34,048 | 2,34,048 |
4. It is case of the petitioner that the petitioner was a small time assessee and running a small grocery shop. The petitioner has failed to file reply to the notices issued prior to the impugned order as they were posted in the GST common portal and therefore, the petitioner may be given one opportunity to explain the case.
5. The above submission is opposed by the learned Government Advocate for the respondent, on the ground that the Writ Petition is hopelessly time barred and therefore, liable to be dismissed, on account of latches, in the light of the decision of the Hon’ble Supreme Court in the case of Assistant Commissioner (CT) LTU, Kakinada and others vs. Glaxo Smith Kline Consumer Health Care Limited reported in 2020 SCC Online SC 440.
6. It is submitted that the appellate remedy is also time barred in terms of limitation under Section 107 of the respective GST Enactments as held by the Hon’ble Supreme Court in the case of Singh Enterprises Vs. Commissioner of Central Excise, Jamshedpur and others reported in (2008) 3 SCC 70 and submitted that this Writ Petition is liable to be dismissed.
7. Having considered the arguments advanced by the learned counsel for the petitioner and the learned Government Advocate for the respondent, this Court is of the view that the petitioner may have a case on merits and therefore, this Court is inclined to grant partial relief to the petitioner by quashing the impugned order and remitting the case back to the respondent to pass fresh orders, subject to the petitioner depositing Rs.1,50,000/- (Rupees One Lakh and Fifty Thousand only) to the credit of the respondent from his Electronic Cash Register.
8. The impugned order, which stands quashed, shall be treated as addendum to the show cause notice that preceded the impugned order.
9. It is expected that the petitioner shall file a reply to the notice that preceded the impugned order within a period of 30 days from the date of receipt of a copy of this order together with the above deposit. The respondent shall, thereafter, pass fresh orders on merits and in accordance with law as expeditiously as possible preferably within a period of three months. Needless to state, the petitioner shall be heard, before passing the order.
This Writ Petition is allowed, with above directions. No costs. Consequently connected miscellaneous petitions are closed.
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