Case Law Details
Exide Industries Limited Vs Deputy Commissioner (ST)-I (Madras High Court)
Madras High Court has set aside assessment orders issued against Exide Industries Limited for the financial years 2017-18 and 2018-19 and remanded the matter for reconsideration. The dispute arose when the Deputy Commissioner (ST)-I observed a mismatch between Exide’s reported turnover in its financial statements and the figures submitted in GSTR-3B returns. The company, engaged in manufacturing electric storage batteries, argued that revenue from scrap battery sales was accounted for under material costs and not turnover, leading to the perceived discrepancy. Despite providing clarifications, the assessing authority did not fully consider these explanations before passing the disputed orders.
During the hearing, Exide Industries submitted additional documents breaking down the tax payments on scrap and battery sales. The Government Advocate acknowledged that these details had not been examined before the assessment orders were finalized. Consequently, the court ruled that Exide should be given another opportunity to present its case, including submitting additional documents and a detailed reply. The assessing authority has been directed to issue a fresh notice, conduct a personal hearing, and reassess the matter in accordance with the law. This decision highlights the importance of due process in GST assessments and ensures that taxpayers’ explanations and documentary evidence are properly evaluated before finalizing tax liabilities.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
Since the issue involved and the relief sought in both the Writ Petitions are identical in nature, the same were heard together and disposed of vide this common order.
2. Challenging the impugned orders dated 09.12.2023 and 26.04.2024 passed by the first respondent for the financial years 2017-2018 and 2018-2019, the petitioner has filed the present Writ Petitions.
3. The learned counsel for the petitioner would submit that the petitioner-company is engaged in the business of manufacturing Electric Storage Batteries and parts thereof. During/after the process of manufacturing the battery, the product undergoes multi quality checks at multiple stages of its manufacturing in order to ensure the proper functioning of the product. In case any defect is identified during the test checking, the product is considered as scrap. Thereafter, the said scrap batteries are sold to smelter for extraction of lead from the scrap battery. The said lead is purchased from the smelter and again used as input for manufacturing of batteries and included in the cost of material and does not become part of revenue as per financial statement. Further, for the income from sale of scrap batteries, the requisite tax has been paid. However, the second respondent issued show cause notices stating that the turn over shown in the profit and loss account was less than the turnover reported in GSTR-3B and, therefore, there is a mismatch of the figures set-out in the profit and loss account and GSTR-3B. In the reply to the show cause notices, the petitioner categorically stated that the sale of the scrap was shown under the cost of materials of goods and income from the sale of the batteries alone is shown under the category of turnover. However, the first respondent has not considered these aspects while passing the impugned assessment orders, inspite of providing the entire details.
4. On the other hand, Ms. Amirta Poonkodi Dinakaran, learned Government Advocate (Taxes) appearing for the respondent, would contend that the respondent’s concern is with regard to the mismatch of tax liability between GSTR-3B and remittance of the entire tax amount. She further submitted that the petitioner has paid the tax for the scrap as well as for the sale of the batteries, but whether the entire amount of tax has been deposited or not is the issue in these Writ Petitions.
5. In reply to the aforesaid submission made by the learned Government Advocate for the respondent, today, the learned counsel for the petitioner produced the documents with regard to the GST return filed in GSTR- 3B by giving the split-up of the amount paid towards tax for the sale of the scrap and the tax paid on the amount realized from the sale of the batteries.
6. The learned Government Advocate for the respondent would submit that these aspects have not been considered while passing the assessment orders. Therefore, she submitted that the matter may be remanded to the Authority concerned for re-consideration and the petitioner may be directed to furnish the relevant documents.
7. Heard the learned counsel for the petitioner as well as the learned Government Advocate for respondents.
8. The break-up of the amount paid towards tax for the sale of scrap and tax paid on the amount realized from the sale of the batteries has been placed for the first time before this Court and the same was not been considered by the first respondent before passing the assessment orders. The said fact is not disputed by the learned Government Advocate for the respondents. This Court is, therefore, of the view that an opportunity should be afforded to the petitioner to put-forth its case based on the materials now produced.
9. In the light of the above, this Court issues the following directions:-
(i) The impugned orders are set-aside and the matter is remanded to the first respondent for fresh
(ii) The petitioner is directed to file any additional reply/objections along with required documents and break-up figures as produced before this Court to the first respondent, within a period of two weeks from the date of receipt of a copy of this order.
(iii) On receipt of such additional reply/objections along with required documents from the petitioner, the respondent shall consider the same and issue a 14 days clear notice to the petitioner by fixing the date for personal hearing and thereafter, pass appropriate orders on merits and in accordance with law, after hearing the petitioner, as expeditiously as possible.
10. With the above directions, these Writ Petitions are disposed No Costs. Consequently, connected Miscellaneous Petitions are closed.
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