The Madras High Court, in a matter of under declaration of ineligible Goods and Services Tax ( GST ) – Input Tax Credit ( ITC ) has directed to lift the bank account proceedings or garnishee proceedings on 10% pre-deposit. It granted the opportunity for hearing for the last time.
The petitioner, engaged in the business of providing transport agency services and registered under the GST Act, claims compliance with tax obligations for the financial year 2019-20 by filing returns and paying appropriate taxes.
However, discrepancies were noted in the returns, including differences between GSTR-3B and GSTR-1, GSTR-3B and GSTR-2A, and under-declaration of ineligible Input Tax Credit (ITC).
The respondent issued an intimation in Form DRC-01 on 23.05.2024, followed by reminders on 01.07.2024, 17.07.2024, and 08.08.2024.
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The petitioner asserted that these communications, including the show cause notices and the assessment order, were not served by hand or Registered Post Acknowledgment Due (RPAD) but uploaded under the “view additional notices and orders” section of the GST portal. Consequently, the petitioner was unaware of the proceedings.
A subsequent show cause notice dated 22.08.2024 was served through RPAD, but the impugned order was passed within six days, leaving the petitioner unable to participate in the adjudication process or avail the opportunity for a personal hearing. The petitioner seeks an opportunity to address the alleged discrepancies if allowed.
The petitioner relied on the High Court’s decision in Sree Manoj International v. Deputy State Tax Officer, where a similar matter was remanded for reconsideration upon payment of 10% of the disputed taxes.
The petitioner expressed readiness to pay this amount and requested one final opportunity before the adjudicating authority. The respondent’s counsel did not object to this request.
By mutual consent, the writ petition was disposed of with specific directions. The impugned order dated 28.08.2024 was set aside, and the petitioner was directed to deposit 10% of the disputed taxes within four weeks of receiving the order.
Complete Draft Replies of GST ITC Related Notices, Click Here
Any prior payments, including pre-deposits in appeal, would be adjusted against this amount. The respondent was required to notify any balance due within one week, and the petitioner was instructed to remit the remaining sum within three weeks of such notification.
Non-compliance with this payment condition would result in the restoration of the impugned order. Upon compliance, any recovery actions, such as bank account attachments or garnishee proceedings, were to be withdrawn. The impugned order would then be treated as a show cause notice, and the petitioner was required to submit objections with supporting documents within four weeks.
The respondent was directed to consider these objections and pass an order in accordance with the law after providing a reasonable hearing. Failure to comply with these conditions within the stipulated timelines would lead to the restoration of the impugned order. The writ petition was disposed of accordingly.
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