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Case Law Details

Case Name : Dhirani Metal Industries Vs Assistant Commissioner (ST) (Madras High Court)
Appeal Number : W.P.No.12684 of 2024
Date of Judgement/Order : 06/06/2024
Related Assessment Year :
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Dhirani Metal Industries Vs Assistant Commissioner (ST) (Madras High Court)

In the landmark case of Dhirani Metal Industries Vs Assistant Commissioner (ST), the Madras High Court addressed the issue of GST liability arising from mismatches between GSTR-3B returns and auto-populated GSTR-2A data. The court set aside the initial assessment order and remanded the matter for reconsideration, emphasizing the importance of fair communication and the right to contest tax demands on merits. This article delves into the details of the judgment, the arguments presented, and the implications for businesses facing similar issues.

Dhirani Metal Industries filed a writ petition challenging both the original assessment order and the subsequent rejection of their rectification petition. The issue arose from a show cause notice issued on August 26, 2022, which led to an assessment order on June 22, 2023. The petitioner claimed ignorance of the proceedings as the notices and orders were uploaded on the GST portal without any additional communication.

The petitioner contended that they had resolved the mismatch issue by filing the annual return (GSTR-9) and reconciliation statement (GSTR-9C) before the impugned assessment order was issued. Despite these actions, their rectification petition was rejected. Moreover, the entire tax demand, along with interest and penalty amounting to Rs. 3,54,558, was appropriated from the petitioner’s bank account in March 2024. The petitioner sought another opportunity to contest the tax demand on its merits.

The court observed that the core issue pertained to a mismatch between the GSTR-3B return filed by the petitioner and the auto-populated GSTR-2A data. The petitioner had already placed the relevant documents on record, including the annual return and reconciliation statement. The court noted that the entire liability was appropriated from the petitioner’s bank account, which necessitated a fair opportunity for the petitioner to contest the demand.

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