Madras HC Sets Aside GST Order Due to Natural Justice Violation

Tvl. Zen Machine Tools Vs State Tax Officer -1 (Madras High Court)

The Madras High Court set aside the GST order against Tvl. Zen Machine Tools, issued on 14.06.2023, due to a violation of the principles of natural justice. The petitioner was unaware of the notices uploaded on the GST portal and failed to respond within the stipulated time. Subsequently, the respondent passed an order demanding tax, penalty, and interest, which the petitioner only became aware of after receiving a bank attachment notice. The petitioner argued that they were not given an opportunity for a hearing before the order was issued. The court found that the order was passed without hearing the petitioner, which constituted a violation of natural justice. Consequently, the court remanded the matter back to the tax authorities for reconsideration, instructing the petitioner to submit their objections and documents within two weeks. The court also directed the authorities to provide a personal hearing and lift the bank account attachment immediately upon submission of the court order. The writ petition was disposed of without any costs.

Cash was argued by Advocate Rupesh Sharma for Petitioner

FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT

This writ petition has been filed by the petitioner challenging the order dated 30.09.2021 passed by the respondent.

2. Mr. G. Nanmaran, learned Special Government Pleader (Taxes) takes notice on behalf of the respondent.

3. By consent of the parties, the main writ petition is taken up for disposal at the admission stage itself.

4. The learned counsel for the petitioner submits that all notices/communications were uploaded under the “View Additional Notices and Orders” in the GST portal. However, the petitioner is not aware of the notices uploaded in the GST portal and thus, failed to file their reply within the time. While so, without providing any opportunity to the petitioner, the respondent passed the impugned order dated 14.06.2023, demanding the payment of tax along with penalty and interest for a sum of Rs. 1,86,476/-for the assessment years 2021 and 2022/ They came to know about the notices and impugned order only after Bank Attachment Notice issued to the Petitioner on 15.02.2024 and therefore the impugned orders passed are in violation of the principles of natural justice. He would further submit that the disputed tax has already been recovered.

5. On the other hand, the learned Special Government Pleader (Taxes) would submit that the respondent uploaded the notice for personal hearing in the GST Online Portal. But the petitioner failed to avail the said opportunity. He would further submit that the disputed tax has already been recovered from the Petitioner’s bank account, pursuant to the attachment.

6. Having regard to the admitted fact that the impugned orders came to be passed without hearing the petitioner in violation of the principles of 3/6 natural justice, and also considering the submissions made by the learned counsel on either side and as the disputed tax has already been recovered, this court passes the following order:-

(i) The impugned order dated 14.06.2023 is set aside and the matter is remanded to the respondent for fresh consideration.

(ii) The petitioner shall file their reply/objection along with the required documents, if any, within a period of two weeks thereafter.

(iii) On filing of such reply/objection by the petitioner, the respondent shall consider the same and pass appropriate orders on merits and in accordance with law, after providing an opportunity of personal hearing to the petitioner, as expeditiously as possible.

(iv) Considering the fact that the impugned order itself has been set aside, this Court is of the opinion that the attachment made on the bank account of the petitioner cannot survive any longer and hence, it is lifted. As a sequel, the 3^rd respondent is directed to defreeze the the bank account of the petitioner immediately upon the production of a copy of this order.

7. Accordingly, the writ petition is disposed of. There is no order as to costs. Consequently, the connected miscellaneous petitions are closed.