The Madras High Court quashed the GST ( Goods and Services Tax ) assessment orders on a pre-deposit condition of Rs. 45 lakhs. The court observed that the petitioner/ assessee has addressed the issues, thus warranted interference in the orders, subject to certain conditions.
The court also directed that the assessing officer shall take note of the procedure prescribed in Circular No.12/2022 dated 26.09.2022 issued by the Commissioner of Commercial Taxes, Chennai.
An inspection conducted in late January and early February 2023 under Section 67 of the Tamil Nadu Goods and Services Tax Act 2017 at the place of assessee, Tvl. KCP Infra Limited. During this inspection, the sworn statement of Mr. V. Muthukumaran, Accounts Executive of the petitioner, was recorded on 30th January 2023. The inspection revealed 15 discrepancies, to which the petitioner responded with detailed explanations.
An intimation was issued by the first respondent, STO, on 20th September 2023. The petitioner replied on 27th September 2023, requesting an extension of time to further address the issues. However, without granting the requested extension, a show cause notice was issued on 10th November 2023, followed by the impugned assessment order on 29th February 2024.
During the hearing, the petitioner’s counsel emphasised that each of the 15 discrepancies, including the significant issue of Input Tax Credit ( ITC ) reversal for non-payment within 180 days, was addressed in the reply dated 15th February 2023.
The counsel also highlighted that the petitioner had provided an ageing report for sundry creditors and argued that the petitioner is entitled to claim ITC on delayed payments, subject to payment of interest.
Furthermore, the counsel pointed out that the reply provided by the petitioner during the inspection stage was entirely disregarded in subsequent communications, including the intimation, show cause notice, and the impugned assessment order. Additionally, the turnover related to Andhra Pradesh was included in the financial statement, despite the petitioner’s request for its exclusion, as mentioned in their reply dated 15th February 2023.
On instructions, the petitioner’s counsel proposed to remit a sum of Rs.20,00,000/- for the assessment year 2020-21 and Rs.25,00,000/- each for the assessment years 2018-19 and 2019-20. These amounts were calculated after excluding the disputed tax demands related to ITC reversal and turnover differences between GSTR-9 and the profit and loss account.
Three separate orders dated 29th February 2024, issued under the Tamil Nadu Goods and Services Tax Act 2017, have been challenged on the grounds of breach of natural justice.
Mr. C. Harsha Raj, the Additional Government Pleader, acknowledged the notice and contended that the petitioner was given multiple opportunities to contest the tax demand, including at least three offers for a personal hearing. He argued that submitting documents during the inspection does not absolve the petitioner from the responsibility of responding to the show cause notice and participating in the assessment proceedings.
Upon reviewing the petitioner’s submissions, it was evident that a detailed response was provided for each of the 15 discrepancies during the inspection in February 2023. The petitioner also submitted an ageing report, highlighted the inclusion of Andhra Pradesh revenues in the audited financial statement, and provided a trial balance.
Considering the above facts, the bench of Senthilkumar Ramamoorthy found that the impugned assessment orders warranted interference, subject to certain conditions. The orders were quashed, provided the petitioner remits Rs.20,00,000/- in W.P.No.11468 of 2024 and Rs.25,00,000/- each in W.P.Nos.11458 and 11464 of 2024 within two weeks from the date of the order. The petitioner was also allowed to submit a reply to the show cause notice within this period.
The assessing officer was directed to provide a reasonable opportunity for the petitioner, including a personal hearing, and to issue fresh assessment orders within two months from the receipt of the petitioner’s reply. The officer must also adhere to the procedure outlined in Circular No.12/2022 dated 26th September 2022, issued by the Commissioner of Commercial Taxes, Chennai.
The writ petitions were disposed of accordingly. Mr.S.Durairaj appeared for the petitioner.
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