Laxmi Rolling and Strips Pvt. Ltd Vs State Tax Officer (Intelligence) (Madras High Court)
he Madras High Court has set aside a Goods and Services Tax (GST) order imposing a penalty on Laxmi Rolling and Strips Pvt. Ltd. for the assessment years 2017-18 to 2022-23. The court found that the impugned order, dated September 26, 2024, was passed without granting the taxpayer a mandatory personal hearing, thereby violating principles of natural justice.
The case arose after the State Tax Officer (Intelligence) issued a show cause notice to Laxmi Rolling and Strips Pvt. Ltd. on July 22, 2024. The company subsequently filed a detailed 130-page reply on September 19, 2024. However, the respondent proceeded to issue the penalty order under Section 74 of the TNGST / CGST Act, 2017, without, as alleged by the petitioner, considering the reply or providing an opportunity for a personal hearing.
The inspecting officer’s findings, as extracted in the impugned order, indicated that the taxpayer had “only referred the case laws not discussed about the difference turnover derived based on the electricity consumption.” The officer’s assessment was based on electricity meter readings taken during an inspection, which suggested a discrepancy in production output and turnover. The officer concluded that the taxpayer might have been conducting production elsewhere in an unregistered place or purchasing goods without tax from unknown sources, thus levying the penalty.
