Case Law Details
Brakes India Private Limited Vs Assistant Commissioner (ST) (Madras High Court)
Introduction: In a significant legal development, the Madras High Court addressed an issue in the case of Brakes India Private Limited vs. Assistant Commissioner. The court scrutinized the validity of an order dated 30.10.2023, pertaining to the assessment year 2018-2019. The central concern was the adequacy of notice provided to the petitioner regarding the reversal of Input Tax Credit (ITC).
Detailed Analysis: The petitioner, a registered entity under the current GST regime, contested the order proposing to block their ITC under Rule 86-A of the TNGST/CGST Rules, 2017. The notice, issued by the respondent on 14.02.2023, targeted purchases from M/s. Quality Traders, alleging their non-existence or status as bill traders. The petitioner promptly responded to this notice.
Subsequently, a show cause notice dated 09.10.2023 was issued, with the petitioner claiming to have received it on the same day as the scheduled hearing. The show cause notice set the personal hearing at 02.00 pm on the day of receipt, leaving the petitioner with insufficient time to present relevant documents and explain their position.
The court, without delving into the merits of the case, identified the lack of a reasonable opportunity for the petitioner as a crucial flaw in the proceedings. Consequently, the impugned order directing the reversal of ITC was quashed. The court directed a re-consideration of the matter, emphasizing the need for a reasonable opportunity, including a personal hearing, and ordered the petitioner to submit relevant documents by 24.01.2024.
Conclusion: Madras High Court’s decision in W.P.No.36438 of 2023 serves as a legal precedent, emphasizing the importance of providing a fair and reasonable opportunity to entities facing such proceedings. The court’s intervention underscores the significance of due process, ensuring that parties involved have adequate time and opportunity to present their case. The remand for re-consideration with clear directives establishes a balance between taxpayer rights and regulatory actions, contributing to a fair and just adjudication process.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
This writ petition is directed against the order dated 30.10.2023 in respect of the assessment year 2018 – 2019. The petitioner states that it is a registered person under the current GST regime. The respondent initially issued a notice dated 14.02.2023 proposing to block the petitioner’s Input Tax Credit (ITC) under Rule 86-A of the TNGST / CGST Rules, 2017 in respect of purchases made from M/s.Quality Traders on the ground that they are not in existence or are bill traders. A reply was issued to such notice on the same date. Thereafter, it is stated that the respondent issued show cause notice dated 09.10.2023. The petitioner asserts that the said show cause notice was served on the petitioner by e-mail on 25.10.2023. The show cause notice fixed the personal hearing on the same date at 02.00 pm, i.e. within two hours from the time of receipt of e-mail. Consequently, the petitioner contends that a reasonable opportunity was not provided to the petitioner to submit relevant documents and, more importantly, explain the facts and circumstances. The present writ petition was filed in the said facts and circumstances.
2. Mr.C.Harsha Raj, learned Additional Government Pleader, accepts notice on behalf of the respondent. He submits that the show cause notice dated 09.10.2023 was despatched to the petitioner by registered post with acknowledgment due. Therefore, he submits that the petitioner was provided a reasonable opportunity and that no case is made out for interference.
3. As a consequence of the impugned order, the petitioner has been directed to reverse ITC of a substantial value. Such action has been taken pursuant to a show cause notice dated 09.10.2023, which the petitioner asserts was received on the date of hearing. These facts reveal that a reasonable opportunity was not provided to the petitioner to submit necessary documents and provide an explanation to the respondent. On this limited ground, albeit without expressing any opinion on the merits in the matter, the impugned order calls for interference.
4. Accordingly, W.P.No.36438 of 2023 is allowed by quashing the impugned order dated 30.10.2023 and remanding the matter for re-consideration. The respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and dispose of the matter by a reasoned order. The petitioner shall provide all relevant documents to the respondent on or before 24.01.2024. Upon receipt thereof, after providing a personal hearing, a reasoned order shall be issued within a period of four weeks from the date of receipt of the documents. There shall be no order as to costs. Consequently, W.M.P.Nos.36449, 36450 of 2023 are closed.
Author Bio
