Case Law Details
Arul Rubbers Pvt Ltd. Vs Assistant Commissioner (ST) (Madras High Court)
In the case of Arul Rubbers Pvt Ltd. vs Assistant Commissioner (ST) at the Madras High Court, the petitioner challenged an order dated 27th April 2024 primarily on the grounds that the documents they submitted were not properly considered. The issue arose from a draft proposal received by the petitioner on 21st December 2023 following an audit, to which they responded on 28th December 2023. Subsequently, a show cause notice was issued on 29th December 2023, and the petitioner replied to it on 29th March 2024. The impugned order was issued thereafter.
The petitioner’s counsel argued that the issues raised in both the draft proposal and the show cause notice related to two main points. Firstly, it concerned an inadvertent error in reporting their turnover in the GSTR 3B return for July 2018-19, where Rs. 107,59,17,561/- was reported instead of Rs. 1,07,59,175/-. They corrected this error in their GSTR 1 return and reconciliation statement (Form GSTR 9C) for the year. Despite submitting these documents, the tax proposal was upheld on grounds that the petitioner did not provide a sales list, outward supply invoices, or the reconciliation statement, even though these documents were not initially requested.
Secondly, the issue involved reverse charge mechanism (RCM), where the petitioner had inadvertently availed excess RCM amounting to Rs. 2,17,148/-. They rectified this by reversing the excess amount in their GSTR 3B return for August 2018. This too was brought to the respondent’s attention in their replies to the ASMT 10 notice and the subsequent show cause notice.
On behalf of the respondent, Mr. C. Harsha Raj, learned Additional Government Pleader, acknowledged receipt of the petitioner’s replies and argued that the tax proposals were confirmed due to the non-submission of essential documents such as the sales list and outward supply invoices.
After examining the records, the court noted that there was indeed a possibility of inadvertent errors, and crucially, the requirement for the sales list and invoices was not explicitly mentioned in either the draft proposal or the show cause notice. Consequently, the court deemed it just to afford the petitioner another opportunity to address these issues. Regarding the RCM issue, where the excess availed amount had been reversed, the court directed the petitioner to remit 10% of the disputed tax demand within fifteen days to protect the revenue’s interest. Upon receipt of this remittance and additional documents, if satisfied, the respondent was ordered to provide a fresh decision within three months, including a personal hearing for the petitioner.
Therefore, the court set aside the impugned order dated 27th April 2024 under the condition of the 10% remittance related to the RCM issue, allowing the petitioner to submit further documents within the specified timeframe for reconsideration. The case, W.P.No.16036 of 2024, was disposed of accordingly, with no costs imposed. Subsequently, related motions, W.M.P.Nos.17533 and 17534 of 2024, were closed as well.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
An order dated 27.04.2024 is assailed primarily on the ground that the documents placed on record by the petitioner were not duly taken into consideration. A draft proposal dated 21.12.2023 was received by the petitioner pursuant to an audit. The petitioner replied thereto on 28.12.2023. A show cause notice dated 29.12.2023 was issued shortly after receipt of the petitioner’s reply. The petitioner replied to such show cause notice on 29.03.2024. The impugned order was issued thereafter.
2. Learned counsel for the petitioner submits that two issues were dealt with both in the draft proposal and the show cause notice. The first issue related to the turnover of the petitioner as reported in the GSTR 3B return for July 2018-19. He submits that an inadvertent error was committed by reporting Rs.107,59,17,561/- instead of Rs.1,07,59,175/-. He also points out that the error was rectified while filing the GSTR 1 return for July 2018-19 and the reconciliation statement in Form GSTR 9C for the year. In spite of submitting these documents, learned counsel submits that the tax proposal was confirmed on the ground that the petitioner had not submitted the sales list, outward supply invoices and reconciliation statement. He also points out that these documents were not called for.
3. As regards the second issue, learned counsel submits that it related to RCM. Upon noticing that excess RCM of Rs.2,17,148/- had been availed of, he submits that the petitioner reversed such excess availment in the GSTR 3B return for August 2018. He also submits that this was brought to the notice of the respondent both in the reply to the ASMT 10 notice and in the reply to the show cause notice.
4. Mr. C. Harsha Raj, learned Additional Government Pleader, accepts notice for the respondent. He submits that the petitioner’s replies were duly considered and that the tax proposals were confirmed on account of non production of documents such as the sales list and outward supply invoices.
5. The petitioner has placed on record the relevant GSTR 3B, GSTR 1 and GSTR 9C returns. On examining the same cumulatively, it appears prima facie that there could have been an inadvertent error. Neither the draft proposal nor the show cause notice referred to the requirement for the sales list and outward supply invoices. In these circumstances, the interest of justice warrants that another opportunity be provided to the petitioner on this issue. As regards the issue relating to RCM, the petitioner stated that the excess RCM availed of was reversed in August 2018. This aspect is required to be examined by the assessing officer. In order to protect revenue interest on this issue, it is necessary to put the petitioner on terms. On instructions, learned counsel for the petitioner agrees to remit 10% of the disputed tax demand as regards the RCM issue.
6. For reasons aforesaid, impugned order dated 27.04.2024 is set aside on condition that the petitioner remits 10% of the disputed tax demand as regards the RCM issue. Such remittance shall be made within fifteen days from the date of receipt of a copy of this order. Within the said period, the petitioner is permitted to submit additional documents. On receipt thereof and on being satisfied that 10% of the disputed tax demand relating to the RCM issue was received, the respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within three months from the date of receipt of such additional documents.
7. W.P.No.16036 of 2024 is disposed of on the above terms. No costs. Consequently, W.M.P.Nos.17533 and 17534 of 2024 are closed.
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