Case Law Details
K.C. & Sons Vs Deputy Commissioner (ST) (Madras High Court)
Madras High Court set aside the interest and penalty order imposed on K.C. & Sons by the Deputy Commissioner (ST) under the GST Act, 2017. The petitioner challenged the order dated 07.12.2023, arguing that it violated principles of natural justice as it failed to consider the material on record. The dispute arose from a mismatch between GSTR-3B and GSTR-2A for the financial year 2017-18, leading to a demand for interest and penalty. The petitioner contended that the excess Input Tax Credit (ITC) in question had already been reversed in 2019, yet the order ignored this fact and proceeded with the levy. Additionally, part of the interest demand had already been paid, making the penalty unwarranted.
The Court found merit in the petitioner’s claims and ruled that a fresh opportunity should be given to present objections. It set aside the impugned order and directed that it be treated as a show cause notice. The petitioner was granted four weeks to submit objections, after which the respondent must reassess the matter following due process. If no response is submitted within the stipulated time, the original order would stand restored. The Court disposed of the writ petition accordingly, without imposing costs.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
The present writ petition is filed challenging the impugned order dated 07.12.2023 on the limited ground that the impugned order suffers from violation of principles of natural justice inasmuch as it does not apply its mind to the material on record while confirming the levy of interest and penalty.
2. It is submitted by the learned counsel for the petitioner that the petitioner is registered under the Goods and Services Tax Act, 2017. During the relevant period 2017-18, the petitioner filed its returns and paid the appropriate taxes. On scrutiny of the returns, it was noticed that there was a mismatch between GSTR 3B and 2A.
3. It is submitted by the learned counsel for the petitioner that a notice in DRC-01A was issued on 02.05.2023 and another notice in DRC-01 with personal hearing notice was issued on 10.05.2023. Further, personal hearing was fixed on 21.06.2023. The petitioner had filed its reply on 09.05.2023, however the impugned order came to be passed on 07.12.2023, confirming the proposal.
4. The learned counsel for the petitioner would submit that the excess availed ITC was reversed in the year 2019, however the impugned order proceeds to levy interest and penalty overlooking the effect that the excess ITC which was availed has already been reversed as early as on 2019. It is further submitted by the learned counsel by the petitioner that portion of the interest which is demanded in the impugned order also stands paid.
5. Taking into account the peculiar facts of the case, wherein, the petitioner has already reversed the ITC which is in dispute, this Court is of the view that the petitioner may be granted one final opportunity to put forth his objections, which was not objected to by the learned Special Government Pleader for the respondent.
6. In view thereof, the impugned order, dated 07.12.2023 is set aside. The impugned order shall be treated as show cause notice and the petitioner shall filed their objections within a period of four weeks from the date of receipt of a copy of this order. If any such objections are filed within the stipulated period, the respondent shall consider the same and pass appropriate orders in accordance with law after affording the petitioner a reasonable opportunity of hearing. If objections are not filed within the stipulated period, i.e., four weeks from the date of receipt of a copy of this order, the impugned order of assessment shall stand restored.
7. Accordingly, the writ petition stands disposed of. No costs. Consequently, connected miscellaneous petitions are closed.
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