Case Law Details
Tvl. Dharieneesh Housing Developers Vs State Tax Officer (Madras High Court)
In a significant judgment, the Madras High Court addressed the grievance of Tvl. Dharieneesh Housing Developers against the State Tax Officer. The case revolved around a tax demand resulting from a mismatch between GSTR-3B and GSTR-2A forms. The petitioner argued that they were denied a fair chance to contest the tax assessment due to inadequate notification of proceedings. The court’s decision to remand the case underscores the importance of procedural fairness in tax assessments.
Background
The case began when Tvl. Dharieneesh Housing Developers challenged an original order dated November 28, 2023, issued by the State Tax Officer. The petitioner claimed they were unaware of the tax proceedings that led to the disputed order. The notices and the impugned order were reportedly only uploaded to the “View Additional Notices and Orders” tab on the GST portal, without being communicated through other channels.
The tax demand was based on discrepancies between the petitioner’s GSTR-3B returns and the auto-populated GSTR-2A. The petitioner contended that they could prove the validity of their claimed Input Tax Credit (ITC) if given a proper opportunity to present their case.
Petitioner’s Arguments
The petitioner, represented by their counsel, emphasized the lack of adequate notice and opportunity to respond to the show cause notice and attend the personal hearing. They argued that all necessary documents were available to demonstrate the legitimacy of the ITC claimed. The petitioner expressed willingness to remit 10% of the disputed tax amount as a condition for the remand, indicating their readiness to cooperate with the tax authorities for a fair reassessment.
Respondent’s Position
On behalf of the respondent, Mrs. K. Vasanthamala, the learned Government Advocate, accepted the notice and pointed out that the impugned order followed an intimation dated July 13, 2022, a show cause notice dated November 14, 2023, and a notice for a personal hearing. Despite these communications, the petitioner failed to respond or attend the hearing.
The respondent’s counsel argued that the tax proposal was confirmed due to the petitioner’s non-compliance with procedural requirements. The core issue was the mismatch between the GSTR-3B returns filed by the petitioner and the auto-populated GSTR-2A data, which suggested discrepancies in ITC claims.
Court’s Observations
Upon reviewing the case, the court noted that the petitioner’s failure to respond to the show cause notice and absence from the personal hearing were critical factors in the confirmation of the tax demand. However, the court also recognized the petitioner’s claim that they had the necessary documentation to justify their ITC claims and that these documents had not been duly considered.
The court emphasized the principle of natural justice, which mandates that parties must be given a reasonable opportunity to present their case. The lack of effective communication regarding the proceedings was seen as a procedural lapse that warranted rectification.
Judgment
The Madras High Court set aside the impugned order dated November 28, 2023, and remanded the matter for reconsideration. This decision was conditional upon the petitioner remitting 10% of the disputed tax demand within two weeks from the receipt of the court’s order. The petitioner was also instructed to submit a reply to the show cause notice within the same period.
Upon receipt of the petitioner’s reply and confirmation of the 10% payment, the respondent was directed to provide a reasonable opportunity for the petitioner to be heard, including a personal hearing. The respondent was then to issue a fresh order within three months from the date of receiving the petitioner’s reply.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
An order in original dated 28.11.2023 is assailed on the ground of denial of reasonable opportunity to the petitioner to contest the tax demand on merits.
2. By asserting that the petitioner was unaware of the proceedings culminating in the impugned order because the notices and the impugned order were uploaded in the “View Additional Notices and Orders” tab on the GST portal, the present writ petition was filed.
3. Learned counsel for the petitioner submits that the confirmed tax proposal pertains to a mismatch between the GSTR-3B and the auto-populated GSTR-2A. If provided an opportunity, learned counsel submits that the petitioner would be in a position to establish that Input Tax Credit (ITC) was validly availed of. On instructions, he submits that the petitioner agrees to remit 10% of the disputed tax demand as a condition for remand.
4. Mrs. K. Vasanthamala, learned Government Advocate, accepts notice on behalf of the respondent. By referring to the impugned order, learned counsel points out that such order was preceded by an intimation dated 13.07.2022, a show cause notice dated 14.11.2023 and a personal hearing notice.
5 On examining the impugned order, it is evident that the tax proposal was confirmed because the petitioner did not reply to the show cause notice or attend the personal hearing. It is also clear that the tax proposal pertains to the mismatch between the returns filed by the petitioner and the auto-populated GSTR-2A.
6. Learned counsel for the petitioner contends that the necessary documents are available to establish that the petitioner did not avail of ineligible ITC. In these circumstances, the interest of justice warrants, the provision of an opportunity to the petitioner to contest the tax demand on merits, albeit by putting the petitioner on terms.
7. For reasons set out above, the impugned order dated 28.11.2023 is set aside and the matter is remanded to the respondent for reconsideration subject to the condition that the petitioner remits 10% of the disputed tax demand within two weeks from the date of receipt of a copy of this order. Within the aforesaid period, the petitioner is 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 order within three months from the date of receipt of the petitioner’s reply.
8. The writ petition is disposed of with the above terms. There shall be no order as to costs. Consequently, connected miscellaneous petitions are also closed.
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