Case Law Details
Tvl. Kavinkumar Textiles Vs Deputy State Tax Officer-I (Madras High Court)
The Madras High Court recently addressed a writ petition challenging an order dated 29.09.2023. The petitioner, Tvl. Kavinkumar Textiles, contested proceedings initiated against them following an inspection. The court examined key issues raised by the petitioner and the respondent’s arguments, leading to a critical analysis of the impugned order.
Detailed Analysis
The petitioner’s counsel argued that certain aspects of the impugned order were flawed. Firstly, regarding the variance in turnover declared in GSTR 3B compared to the GSTR 1 statement, it was highlighted that the petitioner had already cleared tax dues before the issuance of the intimation dated 14.02.2023. Secondly, concerning the reversal of Input Tax Credit (ITC) claimed for purchases from Sri Vela Hardware and Paints, the petitioner asserted that the purchased items were used for machinery repairs, not building paint.
The Additional Government Pleader countered, stating that the petitioner failed to fully discharge CGST and SGST liabilities, leading to imposed penalties.
Conclusion
Upon scrutiny, the court found discrepancies in the impugned order. It noted that the respondent had overlooked crucial aspects of the petitioner’s reply and annexed documents, rendering the order unsustainable. Consequently, the court set aside the order pertaining to the GSTR 1 and 3B variance and ITC reversal issues. The matter was remanded for reconsideration, emphasizing the importance of considering petitioner submissions.
Final Thoughts
The case highlights the significance of comprehensive examination and consideration of all relevant documents and arguments in administrative proceedings. The court’s decision underscores the principle of fairness and due process in adjudicating tax matters, ensuring that parties have a genuine opportunity to present their case.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
An order dated 29.09.2023 is challenged in this writ petition. Proceedings were initiated against the petitioner pursuant to an inspection. An intimation dated 14.02.2023 was issued and the petitioner replied thereto on 13.03.2023. This was followed by a show cause notice dated 17.03.2023. The petitioner replied thereto on 23.09.2023. The impugned order came to be issued thereafter on 29.09.2023.
2. Learned counsel for the petitioner referred to the impugned order and pointed out that except for two issues, proceedings were dropped in relation to other issues. The first issue he focused on was difference in turnover declared in GSTR 3B on comparison with the GSTR 1 statement. On this issue, he pointed out that the petitioner paid the tax dues by way of a debit from the electronic credit ledger of the petitioner on 09.01.2023. He pointed out that this was even prior to the issuance of the intimation dated 14.02.2023. In these circumstances, learned counsel submits that the imposition of 100% penalty warrants reconsideration. He also points out that the respondent recorded the finding that the petitioner had only replied with regard to the tax and not with regard to penalty. The second issue that learned counsel focused on was the reversal of the Input Tax Credit (ITC) claimed in respect of purchases from Sri Vela Hardware and Paints. Learned counsel pointed out that the petitioner had purchased GI pipes from the supplier and used the same for machinery repairs and maintenance purposes only. In spite of enclosing details of purchases made along with reply dated 23.09.2023, learned counsel submits that it was concluded in the impugned order that the petitioner had purchased paint for the building.
3. Mr. T.N.C.Kaushik, learned Additional Government Pleader, accepts notice for the respondent. By referring to the impugned order, he contends that the petitioner discharged liability to the extent of Rs.42,726/-, but failed to discharge liability of Rs.20,232/- each towards CGST and SGST. He submits that penalty was imposed in the said facts and circumstances.
4. On examining the impugned order, it is noticeable that the respondent recognised the fact that the petitioner paid amounts due with regard to the difference between GSTR 1 and 3B on 09.01.2023. In spite of noticing the same, the respondent recorded at page no.23 of the typed set that the taxable person did not pay the tax dues within 15 days of the receipt of the notice dated 17.03.2023. This conclusion is contrary to the documents on record. As regards the reversal of ITC in respect of purchases from Sri Vela Hardware and Paints, it is unclear as to the basis for concluding that the petitioner had purchased paint in view of the petitioner’s reply dated 23.09.2023 and the documents annexed thereto. The undischarged liability of Rs.20,232/- each towards CGST and SGST, which learned Additional Government Pleader referred to, relates to this and not the first issue. Since the petitioner’s reply and the documents annexed thereto were not taken into consideration, the impugned order is unsustainable as regards these issues.
5. For reasons set out above, the impugned order is set aside in so far as it pertains to the issues relating to difference between GSTR 1 and 3B and reversal of ITC with regard to purchases from Sri Vela Hardware and Paints. As a corollary, the matter is remanded for reconsideration only with regard to these two issues. After providing a reasonable opportunity to the petitioner, including a personal hearing, the respondent is directed to issue a fresh order with regard to these two issues within a period of three months from the date of receipt of a copy of this order.
6. The writ petition is disposed of on the above terms without any order as to costs. Consequently, connected miscellaneous petitions are closed.
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