Case Law Details
Haarine Associates Vs Assistant Commissioner (ST)(FAC) (Madras High Court)
The Hon’ble Madras High Court in Haarine Associates v. Assistant Commissioner (ST)(FAC) [Writ Petition No.15691 of 2024 and W.M.P. Nos.17100 to 17102 of 2024 dated June 24, 2024], set aside an assessment order because the order was issued without providing an opportunity to address the discrepancies. Consequently, the court agreed with the Assessee to remit 10% of the disputed tax demand within two weeks and allowed the submission of reply to the show cause notice (“the SCN”).
Facts:
M/s. Haarine Associates (“the Petitioner”), filed returns for the assessment period 2017-18.
The Petitioner’s FORM GSTR 1 statement, FORM GSTR 3B and the annual return reflected the turnover from July 01, 2017 to March 31, 2018. Subsequently, FORM ASMT-10 was issued on July 05, 2023. Thereafter, on August 07, 2023 a SCN was served and personal hearing was conducted on September 15, 2023.
The Petitioner contended that the period from April 01, 2017 to June 30, 2017 was the pre-GST period, he submits that there would be a mismatch between FORM 26 AS and the petitioner’s GST returns. Merely on the basis of such mismatch, that tax liability was imposed on the Petitioner. Further, the Petitioner agreed to remit 10% of the disputed tax demand as a condition for remand.
Lastly, an Assessment Order dated December 28, 2023 (“the Impugned Order”) was passed.
Aggrieved by the Impugned order, the Petitioner filed the present writ petition on the ground of breach of natural justice and no application of mind.
Issue:
Whether the Assessee should be granted opportunity of personal hearing?
Held:
The Hon’ble Madras High Court in Writ Petition No.15691 of 2024 and W.M.P. Nos. 17100 to 17102 of 2024 held as under:
- Directed that, the Petitioner is permitted to submit a reply to the SCN and directed the Respondent to provide a reasonable opportunity to the Petitioner, including a personal hearing, and thereafter issue a fresh order within a period of three months from the date of receipt of the petitioner’s reply. On account of the Impugned Order being set aside.
- Held that, the Impugned order was set aside subject to the condition that the Petitioner remitted 10% of the disputed tax demand as agreed to within a period of two weeks from the date of receipt of a copy of the Impugned Order.Top of Form
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
An order in original dated 28.12.2023 is assailed both on the ground of breach of principles of natural justice and on the ground of non application of mind. The petitioner had filed returns under applicable GST enactments for assessment period 2017-2018. Pursuant to show cause notice dated 07.08.2023, the impugned order was issued on 28.12.2023.
2. Learned counsel for the petitioner submits that GST enactments came into force on 01.07.2017. Therefore, he submits that the petitioner’s GSTR 1 statement, GSTR 3B return and the annual return reflected the turnover from 01.07.2017 to 31.03.2018. Because the period running from 01.04.2017 to 30.06.2017 was the pre-GST period, he submits that there would be a mismatch between Form 26 AS and the petitioner’s GST returns. Merely on the basis of such mismatch, he submits that tax liability was imposed on the petitioner. On instructions, without prejudice to the above contention, he submits that the petitioner agrees to remit 10% of the disputed tax demand as a condition for remand.
3. Mr.T.N.C.Kaushik, learned Additional Government Pleader, accepts notice for the 1st respondent. By referring to the impugned order, he points out that principles of natural justice were complied with by issuing notice in Form ASMT 10 dated 05.07.2023, show cause notice dated 07.08.2023 and a personal hearing notice dated 15.09.2023.
4. On examining the impugned order, it is evident that tax liability was imposed on the petitioner on the difference between the turnover reflected in Form 26 AS and the turnover reflected in the petitioner’s GST returns. Learned counsel for the petitioner explained this difference by pointing out that the period running from 01.04.2017 to 30.06.2017 does not fall within the GST period. Since the impugned order was issued without hearing the petitioner on this aspect, reconsideration is necessary by putting the petitioner on terms with regard to the default in responding to the show cause notice or participate in proceedings.
5. For reasons set out above, the impugned order dated 28.12.2023 is set aside subject to the condition that the petitioner remits 10% of the disputed tax demand as agreed to within a period of two weeks from the date of receipt of a copy of this order. The petitioner is permitted to submit a reply to the show cause notice within the aforesaid period. Upon receipt of the petitioner’s reply and upon being satisfied that 10% of the disputed tax demand was received, the 1st respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within a period of three months from the date of receipt of the petitioner’s reply. On account of the assessment order being set aside, the bank attachment is raised.
6. The writ petition is disposed of on the above terms without any order as to costs. Consequently, connected miscellaneous petitions are closed.
(Author can be reached at [email protected])
Author Bio
