Case Law Details
Stem Infrastructure Vs Assistant Commissioner (ST) (Madras High Court)
Summary: In Stem Infrastructure v. Assistant Commissioner (GST) [W.P. No. 12406 of 2024], the Madras High Court overturned a tax assessment order issued on December 18, 2023, due to the negligent conduct of the petitioner’s accountant. The petitioner argued they were unaware of the proceedings and the show cause notice (SCN) because their accountant failed to inform them. Despite the Revenue Department’s claim of sending reminders, the court found that the petitioner was denied a fair opportunity to respond. The court ruled that the petitioner should be granted the chance to contest the tax demand on its merits, provided they deposit 10% of the disputed amount. The order requires the petitioner to file a reply to the SCN and mandates the Revenue Department to offer a personal hearing and issue a fresh assessment order after receiving the deposit. This decision ensures that procedural fairness is upheld, allowing the petitioner to address the tax demand properly.
Introduction:
The Hon’ble Madras High Court in Stem Infrastructure v. Assistant Commissioner (GST) [W.P. No. 12406 of 2024 dated June 07, 2024], set aside the assessment order and granted opportunity to contest tax demand wherein the assessee could not file the reply due to negligent conduct of the accountant as the assessee was not informed about the proceedings initiated by the revenue department.
Facts:
Stem Infrastructure (“the Petitioner”), filed a writ petition against order dated December 18, 2023 (“the Impugned Order”) wherein the Revenue Department (“the Respondent”) states that the Impugned Order has been passed after sending adequate reminders before the issuance of the Show Cause Notice (“the SCN”). However, the Petitioner contends that they were unaware of proceedings initiated by the Department as the Accountant engaged by the Petitioner did not inform about the aforesaid proceedings.
Issue:
Whether the Petitioner should be denied opportunity to contest tax demand due to negligent conduct of the accountant?
Held:
The Hon’ble Madras High Courtin W.P. No. 12406 of 2024 held that as per the aforesaid facts, the proper opportunity should be granted to the Petitioner for contesting the tax demand on merits. Hence, the Impugned Order is set aside subject to the condition that the Petitioner remits 10 per cent of the disputed tax demand. Further, the Court permitted the Petitioner to file the reply to the SCN issued. Further, the Court directed that after receiving of the deposit, reasonable opportunity should be granted such as personal hearing, and thereafter fresh assessment order should be passed.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
An order dated 18.12.2023 is assailed on the ground that the petitioner was unaware of proceedings culminating in the impugned order because the petitioner had engaged the services of an Accountant to handle GST compliances and such Accountant did not inform the petitioner about these proceedings.
2. Learned counsel for the petitioner submits that a request for an adjournment was made by communication dated 22.11.2023, but such communication was disregarded while issuing the impugned order. On instructions, learned counsel submits that the petitioner agrees to remit 10% of the disputed tax demand as a condition for remand.
3. Mr. V. Prasanth Kiran, learned Government Advocate, accepts notice for the respondent. He points out that the impugned order was preceded by an intimation dated 15.09.2023, a show cause notice dated 23.09.2023 and two reminders. He also submits that he has no instructions with regard to the communication dated 22.11.2023.
4. On perusal of the impugned order, it is evident that the tax proposal pertains to the mismatch between the GSTR 3B returns of the petitioner and the auto populated GSTR 2A. It is also evident that the tax proposal was confirmed because the petitioner did not reply to the show cause notice and the personal hearing notices. In effect, the tax proposal was confirmed without considering the objections of the petitioner. In these circumstances, albeit by putting the petitioner on terms, it is just and necessary to provide the petitioner an opportunity to contest the tax demand on merits.
5. For reasons set out above, the impugned order dated 18.12.2023 is set aside subject to the condition that the petitioner remits 10% of the disputed tax demand as agreed to within a maximum period of two weeks from the date of receipt of a copy of this order. Within the aforementioned period, the petitioner is also permitted to submit a reply to the show cause notice. Upon receipt thereof and upon being satisfied that 10% of the disputed tax demand was received, the respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh assessment order within a period of three months from the date of receipt of the petitioner’s reply.
6. W.P.No.12406 of 2024 is disposed of on the above terms. No costs. Consequently, W.M.P.Nos.13534 and 13535 of 2024 are closed.
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