M.S. Distributors Vs Office of Assistant Commissioner (State Taxes) (Madras High Court)
Madras High Court has intervened in a tax dispute, setting aside demand and penalty orders issued by the tax authorities against a petitioner for the Assessment Year 2019-20. The court’s decision hinged on the principles of natural justice, specifically the absence of a personal hearing and the method by which initial notices were communicated.
The petitioner approached the High Court challenging an order dated April 5, 2024, and a subsequent order dated August 19, 2024, which demanded tax with penalty. The core of the petitioner’s argument was that they were unaware of the proceedings leading to these orders. According to the petitioner’s counsel, Mr. T.N.C. Kaushik, the initial show cause notice dated January 28, 2024, was uploaded only to the “view additional notices and orders” column of the GST portal. This, the petitioner contended, resulted in them not receiving proper notification and consequently, being unable to file a reply.
The petitioner claimed to have discovered the demand and penalty orders only after receiving a bank attachment notice from the third respondent. It was also stated that 40% of the disputed tax liability had already been recovered from their account. A crucial point raised by the petitioner was the alleged denial of a personal hearing before the impugned orders were passed, arguing that this violated the principles of natural justice.
