Chinnadurai Saravanan Vs Deputy State Tax Officer (Madras High Court)
Madras High Court recently addressed a writ petition filed by Chinnadurai Saravanan, a proprietary firm registered under the Goods and Services Tax (GST) Act, 2017. The petition challenged an assessment order dated April 29, 2024, issued by the Deputy State Tax Officer for the assessment year 2018-19. The core issue stemmed from alleged discrepancies between the petitioner’s GSTR-3B returns and the auto-populated GSTR-2A statements, leading to a tax dispute.
The matter escalated after the tax authorities observed the mismatch during verification of the petitioner’s monthly returns. Consequently, a notice in Form DRC-01A was issued on July 9, 2022, followed by a show cause notice (DRC-01) on November 24, 2023, and a reminder in April 2024. Although the petitioner submitted a reply on December 23, 2023, it was rejected by the authorities. The rejection was based on the grounds that the taxpayer failed to adequately substantiate their claim concerning input tax credit as required under Section 16(2) of the Central GST (CGST) and Tamil Nadu GST (TNGST) Acts, 2017. This led to the confirmation of the proposed tax demand via the impugned order. An appeal filed by the petitioner against this order was subsequently dismissed due to being filed beyond the prescribed time limit (barred by limitation).
Before the High Court, the petitioner’s counsel cited a recent judgment from the same court, M/s. K. Balakrishnan, Balu Cables vs. O/o. the Assistant Commissioner of GST & Central Excise (W.P.(MD)No.11924 of 2024, dated 10.06.2024), presumably to support the plea for reconsideration. The petitioner expressed willingness to deposit 25% of the disputed tax amount in exchange for a final opportunity to present their case and objections before the adjudicating authority. It was also submitted that a 10% pre-deposit had already been made during the earlier, time-barred appeal, requesting this amount be adjusted against the proposed 25% payment. The counsel representing the state tax department did not raise strong objections, subject to verification of the payment claimed.
Considering the submissions and by the consent of both parties, the High Court disposed of the writ petition, setting aside the assessment order dated April 29, 2024, under specific conditions. The primary condition requires the petitioner to deposit 25% of the disputed tax within four weeks. Any amounts already paid, including the 10% pre-deposit, are to be adjusted against this 25% requirement. The assessing authority is directed to calculate and intimate the balance payable, if any, within one week, which must then be paid by the petitioner within the subsequent three weeks, ensuring the entire 25% is paid within the overall four-week timeframe.
Upon fulfilment of the payment condition, the original assessment order will be treated merely as a show cause notice. The petitioner will then have four weeks to submit detailed objections along with supporting documents. The assessing authority is mandated to consider these objections, provide a reasonable hearing opportunity, and pass a fresh order in accordance with the law. However, failure to deposit the 25% or file objections within the stipulated timelines will automatically restore the original assessment order dated April 29, 2024. Any recovery actions, like bank account attachments, are to be lifted upon compliance with the payment condition.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
