Complete Case Digest on Pre-deposits under GST and VAT - [Part 1]

A pre-deposit is an advance payment required before proceeding with certain legal or administrative processes. The pre-deposit mainly serves to protect the revenue interest and also to reduce the burden of the taxpayer from paying full disputed tax. As only 10% or 20%, whatever  the rate may be fixed, justice will be served to both sides. The rate or amount is pre-fixed by the department.

SUPREME COURT

No Liability to Pre-Deposit for Bail in GST Case in absence of Completed Assessment: Supreme Court RAJESH KUMAR DUDANI vs THE STATE OF UTTARAKHAND & ANR CITATION: 2023 TAXSCAN (SC) 129

The Supreme Court ruled that an appellant is not required to pre-deposit half the alleged revenue loss in the absence of a completed assessment to obtain bail. The High Court of Uttarakhand had denied anticipatory bail, but the Supreme Court, citing precedents, held that bail cannot be conditioned on such a pre-deposit without a finalized tax assessment. Justices Krishna Murari and Ahsanuddin Amanullah referenced similar cases to support their decision, emphasising that imposing such conditions for bail is not justified without a confirmed tax liability.

Supreme Court sets aside Pre deposit of Bank Guarantee as Condition for Bail MAKHIJANI PUSHPAK HARISH vs THE STATE OF GUJARAT CITATION: 2023 TAXSCAN (SC) 156

The Supreme Court recently set aside an order that imposed a bank guarantee as a pre-deposit condition for bail in the case of Makhijani Pushpak. Pushpak was arrested under Sections 69 and 132(1)(a) of the CGST Act, seeking bail under Section 437 of the CrPC in Vadodara. The Court of Chief Judicial Magistrate granted bail with a condition to submit a bank guarantee of Rs. 3 crores. The High Court later modified this to Rs. 1.5 crores but was challenged by Pushpak.

Citing precedents like Subhash Chouhan vs. Union of India, the Supreme Court ruled that such pre-deposit conditions for bail are unjustifiable. Justices Krishna Murari and Ahsanuddin Amanullah held that the bank guarantee condition imposed by the High Court was set aside, affirming the rest of the bail conditions set by the lower court and directing Pushpak's release on bail.

Waiver of Pre-deposit to extent of 10% under DVAT Act: SC issues Notice IKEA TRADING (INDIA) PVT. LTD. vs COMMISSIONER OF TRADE AND TAXES CITATION: 2024 TAXSCAN (SC) 133

The Supreme Court issued notice to the Commissioner of Trade and Taxes regarding the waiver of pre-deposit up to 10% under the Delhi Value Added Tax Act, 2004 (DVAT Act). The appeal arose from the Delhi High Court's Division Bench decision dated 20 March 2023, which dismissed the appeal challenging the waiver of pre-deposit. The Special Leave Petition (SLP) stemmed from the final judgment and order dated 24-11-2023 in VATA No. 8/2023 issued by the Delhi High Court. A Two-Member Bench comprising Justice BV Nagarathna and Justice Manoj Misra issued notice to the respondent in this matter.

HIGH COURTS

Interest allowable on Refund of Pre-Deposit paid for filing Appeal: Delhi HC MRF LTD vs THE COMMISSIONER OF TRADE AND TAXES & ANR.

The Delhi High Court has recently allowed interest on the refund of pre-deposit paid as a statutory requirement for filing an appeal. A two-judge bench comprising Justices Ravindra Bhatt and A K Chawla heard a writ petition by MRF Ltd. The petitioner argued that the GST authorities did not permit interest on the pre-deposit made during the appeal. The court held that pre-deposit sums do not bear the character of tax and should carry interest if the appeal succeeds. The bench ordered the respondents to process and credit the interest to the petitioner’s account within four weeks.

GST Returns not filed and Taxes not Paid during COVID period: Madras HC sets aside Demand Order on Rs. 2L pre-deposit condition Nagoorar Enterprises vs State Tax Officer CITATION: 2024 TAXSCAN (HC) 1280

In a recent ruling, the Madras High Court set aside a demand order contingent on a Rs. 2 lakh pre-deposit. Nagoorar Enterprises, the petitioner, failed to file GST returns and pay taxes on time during the COVID-19 pandemic due to various hardships. Despite eventually filing returns and paying taxes, they faced interest liabilities.

Justice Senthilkumar Ramamoorthy noted the petitioner had already paid Rs. 2 lakhs towards the aggregate demand of Rs. 12 lakhs and agreed to remit an additional Rs. 2 lakhs. Consequently, the court set aside the interest orders, mandating the petitioner to pay the additional Rs. 2 lakhs within three weeks.

GST: Recovery of Demand from Electronic Cash Ledger before Expiry of Time to file Appeal is Clear Violation of Law, rules Calcutta HC Purulia Metal Casting Pvt. Ltd. vs Assistant Commissioner of State Tax, Purulia Charge & Ors. CITATION: 2022 TAXSCAN (HC) 539

The Calcutta High Court ruled on Thursday that the GST department's recovery of tax demand from the electronic cash ledger before the statutory appeal period expired violates Section 78 of the Central GST Act, 2017. Purulia Metal Casting Pvt. Ltd. contested the recovery of demand from its electronic credit ledger on February 1, 2022, just 49 days after an adjudication order on December 14, 2021. Justice Md. Nizamuddin directed the authorities to refund the excess amount collected and allow the petitioner 15 days to file an appeal. If the appeal is filed within this period, the appellate authority must consider the limitation leniently.

Power to Grant Stay with Pre-Deposit of 20% of Disputed Demand is a directory in Nature, not Mandatory: Delhi HC DR B L KAPUR MEMORIAL HOSPITAL vs COMMISSIONER OF INCOME TAX CITATION: 2022 TAXSCAN (HC) 950

The Delhi High Court ruled that the requirement to deposit 20% of a disputed tax demand for a stay is directory, not mandatory. Dr. B L Kapur Memorial Hospital challenged orders directing them to pay 20% of the tax demand for the 2013-14 and 2014-15 assessment years. The court noted that this requirement, stated in Office Memoranda from 2017 and 2016, is not a strict pre-condition for staying tax recovery pending an appeal. Justices Manmohan and Manmeet Pritam Singh Arora criticized the non-reasoned orders dismissing the hospital's stay applications and remanded the case for fresh adjudication.

Inability to Participate in Proceedings on GSTR 3B and Auto-populated 2A Mismatch: Madras HC sets aside GST Order on 10% Pre-deposit  Thiashola Plantation vs The State Tax Officer CITATION:  2024 TAXSCAN (HC) 1436

The Madras High Court nullified GST orders for 2018-19 and 2019-20 due to M/s. Thiashola Plantation P. Ltd.'s inability to participate in proceedings. The petitioner argued they weren't given a fair chance to contest tax demands as notices were only uploaded on the GST portal, not sent by registered post or email. Justice Senthilkumar Ramamoorthy's bench set aside the orders, directing the petitioner to pay 10% of the disputed tax demand within three weeks and allowed them to respond to the show cause notice. The court instructed a fresh adjudication within three months with a reasonable opportunity, including a personal hearing.

Bombay HC upholds Validity of Provision mandating Pre-Deposit on Customs Appeals United Projects vs The State of Maharashtra CITATION: 2022 TAXSCAN (HC) 532

A three-judge bench of the Bombay High Court upheld the validity of section 129E of the Customs Act, requiring a mandatory pre-deposit for appeals. The court affirmed that fiscal legislation can stipulate such conditions as a prerequisite for entertaining appeals. The petitioners, under the Maharashtra Value Added Tax Act, 2002, faced assessment proceedings and filed appeals, arguing against the pre-deposit requirement. The bench reasoned that such provisions streamline legal processes, conserve resources, and protect revenue interests, affirming the legality and reasonableness of pre-deposit mandates in fiscal laws.

Pre-deposit under GST Appeal can be made through ECL: Orissa HC Kiran Motors vs Addl. Commissioner of CT & GST CITATION: 2023 TAXSCAN (HC) 1304

The Orissa High Court ruled that pre-deposits for GST appeals can be made through the Electronic Cash Ledger (ECL). Kiran Motors challenged an order rejecting their appeal due to using ECL instead of Electronic Cash Ledger for a 10% pre-deposit. The court cited a July 6, 2022 circular clarifying ECL usage. The appeal will now proceed before the appellate authority, ensuring compliance with the decision within three months.

Orissa HC approves Pre-Deposit of admitted Tax Amount Debited through Electronic Credit Ledger Ranjan Naik vs Joint Commissioner of CT & GST CITATION: 2023 TAXSCAN (HC) 683

The Orissa High Court recently approved the use of Electronic Credit Ledger (ECL) for making a pre-deposit of admitted tax amounts. In a case where Ranjan Naik was the petitioner, the court considered the challenge against the rejection of an appeal due to the use of ECL instead of Electronic Cash Ledger (ECL). The petitioner argued that a GST policy circular allowed pre-deposits to be made via ECL. Justices BR Sarangi and MS Raman set aside the earlier order, acknowledging the petitioner's use of ECL for pre-deposit. The court directed a fresh disposal of the appeal within three months, after hearing both parties.

Madras HC Mandates 10% Pre-deposit to Contest GSTR 1 vs GSTR 3B Discrepancy Tvl. Vishal Agencies vs The Assistant Commissioner (ST) CITATION: 2024 TAXSCAN (HC) 983

The Madras High Court mandated a 10% pre-deposit requirement to contest discrepancies between Goods and Services Tax Returns (GSTR 1) and GSTR 3B. The case challenged an assessment order from October 19, 2023, which the court remanded for reconsideration, noting the petitioner's need for a fair opportunity to contest the tax demand on its merits. The petitioner, responding to notices and a show cause notice, argued that discrepancies were reconciled in their GSTR 9C return, with payments made in April 2018.

The court, while acknowledging the efforts to reconcile, set aside the earlier order and directed the petitioner to deposit 10% of the disputed tax within two weeks. Additionally, the petitioner could submit a response to the show cause notice with relevant documents. Upon compliance, the court instructed the tax authority to provide a reasonable opportunity, including a personal hearing, and issue a fresh assessment order within two months.

Relief to Mount Everest Breweries: Madhya Pradesh HC directs to Refund pre-deposit with 6 % Interest since SLP was dismissed M/S MOUNT EVEREST BREWERIES LTD vs THE STATE OF MADHYA PRADESH CITATION: 2023 TAXSCAN (HC) 585

The Madhya Pradesh High Court directed the State to refund a pre-deposit amount of Rs. 1,10,29,179 to Mount Everest Breweries, along with 6% interest from the date the Special Leave Petition (SLP) was dismissed. The petitioner had filed a petition under Article 226 seeking a refund of taxes collected arbitrarily on beer under the VAT Act. The High Court had earlier quashed the assessment order in favour of the petitioner, which was upheld by the Supreme Court in 2017. Despite this, the State had not refunded the amount, prompting the petitioner to file the current petition. The Court found in favour of the petitioner, stating that interest was applicable from the date of SLP dismissal.

GST Proceedings Unknown Until Garnishee Proceedings: Madras HC Orders Reconsideration 10% Pre-deposit Rana Granites vs Assistant Commissioner CITATION: 2024 TAXSCAN (HC) 1283

The Madras High Court ordered reconsideration of a matter involving a 10% pre-deposit condition. Rana Granites, the petitioner, claimed they were unaware of GST proceedings until garnishee actions in March 2024, as notices were only uploaded on the GST portal without other communication. They contested a confirmed GST proposal on a GSTR-3B and GSTR-2A mismatch, asserting they had only used eligible Input Tax Credit. The government argued adequate opportunities were given, citing a show cause notice and offered personal hearing. The court set aside the impugned order, remanding the matter for reconsideration under conditions: remitting 10% of the disputed tax within two weeks, submitting a detailed reply with documents, and granting a personal hearing for a fresh order within three months.

GST Registrants Obliged to Monitor Portal: Madras HC remands matter for Reconsideration on Pre-deposit Condition M/s.M.B.Travels vs The Assistant Commissioner CITATION: 2024 TAXSCAN (HC) 1235

The Madras High Court ruled that GST registrants are obligated to regularly monitor the GST portal. In this case, M/s M.B. Travels challenged an order, stating they were unaware of proceedings as notices were only uploaded on the GST portal and not communicated through other prescribed modes. The petitioner agreed to remit 10% of the disputed tax demand as a condition for remand. The respondent argued multiple notices and personal hearings were conducted.

Despite finding the petitioner's explanation unsatisfactory regarding awareness of proceedings, the court set aside the order, citing the petitioner's opportunity to contest the tax demand on merits. The court mandated the petitioner to remit 10% of the disputed tax within two weeks, submit a reply and documents, and directed the respondent to provide a personal hearing and issue a fresh order within three months. The writ petition was disposed of without costs.

Mandatory 10% Pre-deposit for Filing GST Appeal is not Possible if Bank Account is Freezed: AP HC Condones Delay of 25 days M/S. S A IRON AND METAL vs THE ASSISTANT COMMISSIONER CITATION: 2023 TAXSCAN (HC) 1241

In a significant decision, the Andhra Pradesh High Court condoned a 25-day delay in filing a Goods and Service Tax (GST) appeal, emphasizing that freezing of the petitioner's bank account rendered it impossible to comply with the mandatory 10% pre-deposit requirement. The case involved M/s S A Iron and Metal challenging an order by the Assistant Commissioner under Section 107 of the A.P. G.S.T Act, 2017, which assessed taxable amounts totaling Rs.5,48,29,347, including tax, penalty, and interest.

The Division Bench, comprising Justices U Durga Prasad Rao and Venkata Jyothirmayi Pratapa, criticized the Appellate Authority's reasoning, noting that the freezing of the petitioner's bank account was a crucial factor impacting their ability to meet the pre-deposit requirement. They overturned the decision, asserting that under Section 107(4) of the CGST Act, considering the circumstances, the appeal should be entertained. The Court emphasized that the reasons given by the Appellate Authority for rejecting the appeal were insufficient and ordered the impugned order to be set aside.

Payment of Tax at 12% at time of Filing Returns and 10% of Disputed Tax as Pre-Deposit: Calcutta HC Remands Matter MOHAMMAD SIKANDAR ALI vs THE ASSISTANT COMMISSIONER CITATION: 2023 TAXSCAN (HC) 867

The Calcutta High Court's Division Bench remanded a matter back to the Assistant Commissioner. Mohammad Sikander Ali, the petitioner, had filed an intra-court appeal against a Single Bench order that denied interim relief in a writ petition challenging an appellate authority's decision on tax demand due to limitation grounds.

The petitioner faced a show cause notice for alleged tax underpayment and failed to respond or submit documents, resulting in a tax liability determination under both Central and State Acts. After filing an appeal with delay and paying 12% tax during return filing and 10% as pre-deposit, the appeal was dismissed.

Chief Justice TS Sivagnanam and Justice Hiranmay Bhattacharyya noted the possibility of granting the petitioner another chance to prove their status as a registered government contractor. They set aside previous orders, directing payment of Rs.1 lakh and instructing the Assistant Commissioner to reconsider based on newly submitted documents.

Calcutta HC upholds the Constitutionality of Provision Mandating Pre-Deposit for Filing Appeal under the West Bengal VAT Act M/s. Vatech Wabag Limited vs Deputy Commissioner of Sales Tax, Midnapur Charge & Ors.

The Calcutta High Court recently upheld the constitutionality of Section 84(1) of the West Bengal Value Added Tax Act, 2003, which mandates a pre-deposit of 15% of disputed tax for filing appeals. The bench heard appeals by various dealers challenging the section's validity, arguing that it imposes an exaction rather than a pre-deposit. Justice Debangsu Basak noted that while the word "payment" in the provision can refer to both deposit and tax payment, it does not violate legislative competence. The court affirmed that the requirement ensures compliance before appeal and does not exceed statutory authority.

Assessee cannot Waive Statutory Right of Appeal and Approach HC merely to Avoid Payment of Pre-deposit: Karnataka HC M/S. SALANKI ASSOCIATES vs THE JOINT COMMISSIONER OF COMMERCIAL TAXES APPEALS - 1

In the case of M/s Salanki Associates v. Joint Commissioner of Commercial Taxes & Ors, the Karnataka High Court dismissed a writ petition on the grounds that the petitioner cannot bypass the statutory right to file an appeal by approaching the High Court to avoid paying a pre-deposit. The petitioner had challenged an order of reassessment with penalty and interest by the Joint Commissioner of Commercial Taxes (Appeals), Bangalore.

The court found this argument unacceptable, stating that the right to file an appeal is statutory and must be exhausted before approaching the High Court under Articles 226 and 227 of the Constitution of India.

The bench emphasized that the availability of an alternate remedy, even with conditions like a pre-deposit, does not render the appellate forum ineffective. Allowing otherwise would permit abuse of legal processes. Therefore, the court declared the writ petition as not maintainable due to the availability of an effective alternate remedy.

Delhi HC directs Tax Dept to Refund ‘Pre-Deposit’ with Interest TEAM HR SERVICES PRIVATE LTD. vs UNION OF INDIA & ANR CITATION: 2020 TAXSCAN (HC) 269

The Delhi High Court issued a writ of Mandamus directing the Assistant Commissioner, GST to refund Rs. 2,38,00,000/- with interest at 6% per annum by July 15, 2020. If not refunded by then, the interest rate would increase to 12% per annum from August 1, 2020. The amount was deposited under protest during a service tax audit/investigation without a show cause notice. The Commissioner (Adjudication) later confirmed a demand, and the petitioner appealed to CESTAT, obtaining an interim stay without further deposit. Justices Rajiv Sahai Endlaw and Asha Menon also awarded costs of Rs. 25,000/- to the petitioner due to frivolous litigation by the respondents.

Payment of Pre- Deposit can be made by Utilizing Electronic Credit Ledger: Gujarat HC M/S SHIV CRACKERS vs CHIEF COMMISSIONER OF CGST AND C.E. & ANR. CITATION: 2024 TAXSCAN (HC) 904

A Division Bench of the Gujarat High Court reiterated that the pre-deposit required for filing an appeal under GST can be made using the Electronic Credit Ledger (ECL). The case involved a dispute where the Assistant Commissioner raised the valuation of goods, increasing tax evasion claims. The Additional Commissioner's decision, influenced by a judgment from the Orissa High Court, was challenged. The petitioner cited a GST Policy Wing circular allowing ECL usage for pre-deposit. Justices Bhargav D Karia and Niral R Mehta upheld this argument, quashing the lower court's order and restoring the appeal, directing the petitioner to utilize ECL funds within two weeks for the required 10% deposit under Section 107(6)(b) of the CGST Act.

Unaware of GST Proceedings due to Closure of Factory: Madras HC Orders Re-adjudication on Pre-deposit M/s.Urbane Industries Limited vs The State Tax Officer CITATION: 2024 TAXSCAN (HC) 1441

The Madras High Court set aside an order against M/s. Urbane Industries Limited due to their lack of awareness about GST proceedings, as their factory had been closed. The petitioner challenged a State Tax Officer's order for the assessment period 2017-2018, arguing they were unaware of the proceedings until recently notified. Represented by J. Shankarraman, the petitioner contended the order lacked reasoning and was confirmed without proper communication. After agreeing to remit 10% of the disputed tax, the court found that natural justice required reconsideration of the tax demand on its merits.

Justice Senthilkumar Ramamoorthy remanded the matter, directing the petitioner to pay 10% within four weeks and allowing them to reply to the show cause notice. The respondent was instructed to provide a fair opportunity, including a personal hearing, and issue a new order within three months. The writ petition was disposed of without costs, and related petitions were closed accordingly.

VAT Credit cannot be treated as Pre-Deposit for GST Adjustments: Delhi HC directs Refund FEMC PRATIBHA JOINT VENTURE v COMMISSIONER OF TRADE AND TAXES CITATION: 2023 TAXSCAN (HC) 1400

In a recent ruling, the Delhi High Court directed authorities to refund Rs. 22 crores along with interest under Section 42 of the Delhi Value Added Tax Act, 2004, from the due date till realization. The court emphasized that VAT credit cannot be treated as a pre-deposit for GST adjustments. The case involved FEMC Pratibha Joint Venture, engaged in executing contracts for Delhi Metro Rail Corporation Ltd., seeking refunds due to excess tax credit under DVAT and CST Acts. The court invalidated an adjustment order and ordered timely processing of the refunds. It also allowed the petitioner to challenge default notices through statutory appeals before the Appellate Tribunal.

Electronic Credit Ledger can’t be Debited for making Payment of Pre-Deposit: Orissa High Court M/s. Jyoti Construction vs Deputy Commissioner of CT & GST CITATION: 2021 TAXSCAN (HC) 513

The Orissa High Court ruled that the Electronic Credit Ledger (ECRL) cannot be debited for making payments towards pre-deposits. M/s. Jyoti Construction, a partnership firm in works contracts, challenged orders by the Additional Commissioner of Sales Tax rejecting their appeal under the Odisha Goods and Services Tax Act, 2017. The court upheld that debiting ECRL for pre-deposit payments violated Section 49(3) of the OGST Act and Rule 85(4) of the OGST Rules, 2017, which mandate such payments from the Electronic Cash Ledger (ECL).

The division bench, led by Chief Justice Dr. S. Muralidhar and Justice B.P. Routray affirmed the appellate authority's decision, stating that any reversal of the ECRL debit must be separately addressed by the petitioner through appropriate legal remedies. The court clarified that fulfilling the pre-deposit requirement does not hinge on reversing the ECRL debit entry.

Provision in U.P. Entertainment and Betting Tax requiring Pre-deposit for Filing Appeal is not Arbitrary: Allahabad HC M/S Surya Satellite vs State of U.P. and others

The Allahabad High Court Division Bench upheld Section 12(3) of the U.P. Entertainment and Betting Tax (Amendment) Act, 2009, which requires a pre-deposit for filing appeals. The petitioners, engaged in the entertainment business via cable connections, had challenged the provision as arbitrary. The section mandates payment of the undisputed tax amount and at least one-third of the disputed tax amount for the appeal to be entertained by the State Government. The bench, comprising Justice Sudhir Agarwal and Justice Ravindra Nath Mishra, ruled that the right to appeal is subject to statutory conditions, and fulfilling deposit requirements is integral to challenging orders or amendments. They noted that the deposit requirement, amounting to one-third of the disputed tax, was not excessively burdensome to render the right of appeal ineffective or confiscatory. Therefore, the court dismissed the writ petitions, affirming the validity of Section 12(3).

Accountant’s Exit Led to Unaware GST Proceedings: Madras HC allows to Contest Order on Pre-deposit M.Sumitha vs .Deputy State Tax Officer-2 CITATION: 2024 TAXSCAN (HC) 1519

The Madras High Court allowed M. Sumitha to challenge a GST assessment order by depositing 10% of the disputed tax amount, despite the assessee's lack of awareness of GST proceedings due to their accountant's departure. M. Sumitha contested the order, arguing they lacked a fair opportunity to contest the tax demand due to reliance on an accountant who had left their employment. The court noted a TDS mismatch in GST returns but acknowledged the petitioner's claim of inadvertent errors. The court directed the GST authorities to allow a hearing and issue a fresh order upon receipt of the pre-deposit.

GST: Amount in Electronic Credit Ledger can be Utilized to Pay Pre-deposit, rules Bombay HC Oasis Realty vs Union of India CITATION: 2022 TAXSCAN (HC) 715

The Bombay High Court division bench ruled that Electronic Credit Ledger funds can be used to pay the pre-deposit required under Section 107(6) of the Maharashtra GST Act, 2017. M/s Oasis Realty, the petitioner, challenged an order from the department regarding the utilisation of these funds.

The court held that since the amounts in question were towards output tax, they could be utilised from the Electronic Credit Ledger for the 10% tax in dispute, as mandated by Section 107(6). The court quashed the impugned order and restored the appeal, directing the petitioner to debit the Electronic Credit Ledger within one week for the required amount.

Entire Amount of Pre-Deposit will be Relaxed, Only If Mandatory Deposit is Deposited before Tribunal within 30 days: Chhattisgarh HC M/s Shivshankar Solvent Extraction Private Limited vs Commissioner, Commercial Tax

The High Court of Chhattisgarh dismissed a petition filed by M/s Shivshankar Solvent Extraction Private Limited, a VAT registered establishment, concerning proceedings initiated by the Commissioner of Commercial Tax, Raipur under Section 49(3) of the Chhattisgarh Value Added Tax (VAT) Act. The appellant's challenge to the tax assessment was dismissed by the Chhattisgarh Commercial Tax Tribunal due to non-enclosure of a 20% deposit of the demanded tax amount, as required by Section 48(4)(ii) of the VAT Act. The appellant cited a factory fire and subsequent financial loss as reasons for inability to make the pre-deposit.

The Single Judge initially relaxed the entire 20% pre-deposit requirement, allowing the appeal to proceed on its merits if the deposit was made within 30 days. The Division Bench, led by Chief Justice PR Ramachandra Menon, upheld this decision, stipulating that compliance with the mandatory deposit within 30 days would enable the appellant to benefit from the relaxation granted by the Single Judge.

Imposition of Penalty under GST Act: Madras HC extends Time Limit fixed for filing Appeal with required Pre-Deposit Trans Car India Private Limited vs Additional Commissioner CITATION: 2024 TAXSCAN (HC) 101

The Madras High Court extended the time limit for filing an appeal with the required pre-deposit in a case involving the imposition of penalties under the Goods and Services Tax (GST) Act, 2017. The petitioner challenged Order-in-Original No.25 of 2023 (DGGI) dated 31.05.2023, alleging arbitrariness in its issuance without considering their submissions after a virtual hearing.

The court disposed of the writ petition, allowing the petitioner to challenge the order within 30 days and to deposit 10% of Rs.14,88,370/- as pre-deposit along with the appeal. Upon subsequent consideration, a Division Bench of Justices R Mahadevan and Mohammed Shaffiq extended the time limit granted by the single judge by an additional eight weeks. The appellant was directed to file the appeal before the first respondent with the required pre-deposit within the extended timeframe.

Madras HC allows Reconsideration of Matter on Pre-Deposit Requirement Amid Inability to Participate in GST Personal Hearing  Tvl. Priya Tiles and Interiors vs The Deputy State Tax Officer CITATION: 2024 TAXSCAN (HC) 1277

In a recent ruling, the Madras High Court granted reconsideration of a 10% pre-deposit requirement for Priya Tiles and Interiors, who missed the GST personal hearing due to personal reasons. The petitioner claimed personal difficulties and a breach of Rule 88C of the CGST Rules. They agreed to remit 10% of the disputed tax. The court observed that the tax proposal resulted from discrepancies between GSTR 1 and GSTR 3B returns and the petitioner's failure to respond to the show cause notice.

The court set aside the order, requiring the petitioner to remit 10% of the tax and file a reply within two weeks. The respondent must provide a hearing and issue a fresh order within three months. The petition was disposed of with Mr. R. Ganesh Kanna representing the petitioner.

Unaware of GST Proceedings on Wrongful ITC Availment: Madras HC remanded for Reconsideration on 10% Pre-deposit Condition Pranav Industries vs Office of the Assistant Commissioner CITATION: 2024 TAXSCAN (HC) 1278

The Madras High Court remanded a GST assessment matter for reconsideration, noting the petitioner, Pranav Industries, was not heard due to not replying to the show cause notice or availing of the personal hearing. Pranav Industries asserted they had documents to prove eligible Input Tax Credit (ITC) claims. They agreed to remit 10% of the disputed tax demand. The court, led by Justice Senthilkumar Ramamoorthy, set aside the impugned order and required the petitioner to remit 10% of the tax and submit a reply within two weeks. The respondent must then provide a hearing and issue a fresh order within three months. The court lifted the bank attachment and disposed of the petition. Mr. Rameshkumar Chopra and Mr. V. Prashanth Kiran appeared for the petitioner and respondents, respectively.

Pre-GST Period Turnover Mismatch in Form 26AS and GST Returns: Madras HC orders readjudication on 10% Pre-deposit Haarine Associates vs The Assistant Commissioner (ST)(FAC) CITATION: 2024 TAXSCAN (HC) 1438

The Madras High Court set aside a GST demand order against Haarine Associates, ordering a personal hearing after noting a turnover mismatch between Form 26AS and GST Returns for the period April 1, 2017 to June 30, 2017, which fell within the pre-GST period. The petitioner challenged the order dated 28.12.2023 citing breach of natural justice and lack of proper consideration.

The court observed that GST liability was imposed based on this turnover mismatch without addressing the pre-GST period issue or providing a hearing. The petitioner agreed to remit 10% of the disputed tax demand for reconsideration.

The High Court directed the petitioner to deposit this amount within two weeks and submit a reply to the show cause notice within the same period. It instructed the respondent to provide a personal hearing and issue a fresh order within three months. The assessment order was set aside, and bank attachment lifted accordingly.

Tax Proposal confirmed on GSTR 3B and GSTR 2A Mismatch: Madras HC directs Re-adjudication on 10% Pre-deposit Tvl. Uniform Collections vs The Deputy Commercial Tax Officer CITATION: 2024 TAXSCAN (HC) 1435

In a recent ruling, the Madras High Court set aside a GST order that confirmed a tax proposal due to a mismatch between GSTR-3B returns and auto-populated GSTR-2A for Tvl. Uniform Collections. The court directed re-adjudication of the tax demand, contingent on the petitioner remitting 10% of the disputed tax demand. The petitioner challenged the order dated 10.07.2023, arguing lack of communication regarding proceedings leading to the order.

The court, led by Justice Senthilkumar Ramamoorthy, observed that the petitioner's non-response to the show cause notice and absence from the personal hearing led to the confirmed tax proposal. Emphasizing the need for justice, the court set aside the order and remanded the matter for reconsideration.

Unaware of GST Demand Order until Bank Account Frozen: Madras HC directs Re-adjudication on 10% Pre-deposit Vishagan Architectural Solution vs Director, Government of India CITATION: 2024 TAXSCAN (HC) 1434

The Madras High Court set aside a GST demand order against Vishagan Architectural Solution due to lack of awareness until their bank account was frozen, citing breach of natural justice. The dispute stemmed from a discrepancy between their GSTR-3B return and auto-populated GSTR-2A. The court found that despite the issuance of a show cause notice and hearing notices, the petitioner was unaware of the proceedings. Justice Senthilkumar Ramamoorthy ordered the matter to be remanded for reconsideration, with the petitioner required to remit 10% of the disputed tax demand within 15 days and submit a reply to the show cause notice within the same period.

GST Liability confirmed due to Non-Response to SCN: Madras HC remands for Reconsideration on 10% Pre-deposit Tvl. Yesem Marketing vs The Deputy Commercial Tax Officer CITATION: 2024 TAXSCAN (HC) 1310

In a recent ruling, the Madras High Court remanded and set aside a GST order against Yesem Marketing due to non-response to a Show Cause Notice regarding discrepancies in GST Returns. The petitioner, represented by its Proprietrix, claimed inability to respond due to personal difficulties, prompting a writ petition.

The court found the action was solely based on GSTR discrepancies and not on Rule 88C of the Central Goods and Services Tax Rules, as argued. Justice Senthilkumar Ramamoorthy ordered remand for reconsideration, contingent on the petitioner remitting 10% of the disputed tax demand within two weeks and responding to the notice within the same period. The court directed the respondent to provide a fair opportunity, including a personal hearing.

Unaware of GST Proceedings against Mismatch in GST Returns: Madras HC disposes of Petition on Pre-deposit Condition Dharieneesh Housing Developers vs The State Tax Officer CITATION: 2024 TAXSCAN (HC) 1264

In a recent ruling, the Madras High Court set aside an order and remanded the matter for reconsideration by the respondent, with the condition that the petitioner, Dharieneesh Housing Developers, remit 10% of the disputed tax demand. The petitioner challenged the order citing denial of a fair opportunity to contest the tax demand. They argued unawareness of proceedings due to notices being uploaded on the GST portal without proper notification.

The court noted the tax demand arose from a GSTR-3B and GSTR-2A discrepancy, and recognized the petitioner's claim to validly avail Input Tax Credit (ITC). Justice Senthilkumar Ramamoorthy ordered remand, allowing the petitioner to remit 10% within two weeks, submit a reply to the notice, and receive a fair hearing from the respondent within three months of the reply.

GST Liability raised w.r.t. ITC Reversal on Credit Notes: Madras HC remands for Reconsideration on 12.5% Pre-deposit M/s.Orient Electricals and Engineers India P. Ltd vs Assistant Commissioner CITATION: 2024 TAXSCAN (HC) 1437

In a recent ruling, the Madras High Court set aside a GST demand order concerning Input Tax Credit (ITC) reversal on credit notes in GSTR-2A. The court remanded the case with a 12.5% pre-deposit as submitted by petitioner M/s. Orient Electricals and Engineers India P. Ltd. The petitioner, unaware of the show cause notice issued on 27.06.2023, challenged the order for lack of opportunity to contest the tax demand.

They clarified that credit notes were issued by suppliers without availing ITC. Counsel T.R. Ramesh argued for the petitioner, emphasizing valid ITC claims if given a chance. Respondent's counsel acknowledged the notice and proceedings. Justice Senthilkumar Ramamoorthy granted the petitioner a chance to contest, noting their pre-deposit and directing a fresh order within three months after receiving the petitioner’s reply.

Tax Liability confirmed on GSTR 3B and 2A Mismatch: Madras HC grants Hearing Opportunity on 10% Pre-deposit Laanaa Furniture vs The Deputy Commercial Tax Officer CITATION: 2024 TAXSCAN (HC) 1402

In a recent ruling, the Madras High Court remanded a tax liability case where a mismatch between GSTR 3B and GSTR 2A led to a confirmed tax order. The petitioner challenged the order dated 16.12.2023, citing lack of opportunity to contest the tax demand. The court, noting that the petitioner was unaware of proceedings due to notices being uploaded on the portal, granted an opportunity to contest the tax demand on terms.

Justice Senthil Kumar Ramamoorthy set aside the impugned order, remanding it for reconsideration with a 10% pre-deposit within 15 days. The petitioner was allowed to reply to the show cause notice within this period. Once verified, the respondent was directed to offer a reasonable opportunity, including a personal hearing, and issue a fresh order within three months. The bank attachment was lifted, and the writ petition was disposed of, with connected miscellaneous petitions closed.

Auditor fails to Respond to GST Notices due to Illness: Madras HC directs to Provide Hearing Opportunity on 10% Pre-deposit Jayam Blue Metals vs The Deputy State Tax Officer CITATION: 2024 TAXSCAN (HC) 1377

In a recent ruling, the Madras High Court quashed a GST demand order due to discrepancies between the petitioner's GSTR-3B returns and auto-populated GSTR-2A. The court directed the respondents to provide a hearing opportunity to the petitioner, subject to a 10% pre-deposit condition. The petitioner, represented by S. Kannan, cited their auditor's illness during the relevant period, which affected their compliance and ability to contest the tax demand. C. Harsha Raj, representing the department, affirmed procedural adherence but Justice Senthilkumar Ramamoorthy acknowledged the petitioner's exceptional circumstances. The court ordered a 10% deposit within two weeks and allowed a reply to the show cause notice within the same period. The department must verify compliance and issue a fresh order within three months.

Unaware of GST Proceedings in GSTR 3B and GSTR 2A Mismatch: Madras HC grants Hearing Opportunity on 10% Pre-deposit Ritechoice Foundations and Engineering vs The State Tax Officer CITATION: 2024 TAXSCAN (HC) 1410

The Madras High Court granted a hearing opportunity to the petitioner after a 10% pre-deposit, despite being unaware of GST proceedings regarding discrepancies between GSTR 3B and auto-populated GSTR 2A. The petitioner, represented by Mr. J. Ashish, asserted unawareness of the tax proposal until a notification from Vijaya Bank on 27.05.2024 prompted the filing of the writ petition. Mr. Ashish argued that discrepancies were reconciled in Form GSTR 9C. The court accepted the petitioner's plea, setting aside the order dated 30.12.2023 on condition of the 10% deposit within two weeks. The petitioner could respond to the show cause notice within this period. Upon receipt and verification, the respondent was directed to provide a personal hearing and issue a fresh order within three months. Consequently, the attachment related to the assessment order was lifted, and the writ petition was disposed of.

Inability to Upload Reply on GSTR 1 and GSTR 3B Mismatch: Madras HC Grants Hearing Opportunity on 10% Pre-deposit Abishek Suppliers vs The Commercial Tax Officer CITATION: 2024 TAXSCAN (HC) 1388

The Madras High Court granted a hearing opportunity conditional upon a 10% pre-deposit after Abishek Suppliers, represented by its Proprietrix, faced challenges uploading a reply regarding discrepancies between GSTR 1 statement and GSTR 3B returns. The petitioner received a show cause notice on December 14, 2023, and requested additional time to respond in a letter dated January 12, 2024. Despite this, the reply wasn't uploaded due to inadvertent errors in filing. The court accepted the petitioner's plea, setting aside the impugned order based on the mismatch, contingent upon remitting 10% of the disputed tax within two weeks. They were allowed to reply to the notice within this period. The respondent was directed to afford a fair opportunity, including a personal hearing, and issue a new order within three months upon receipt of the pre-deposit. The petition was disposed of accordingly.

‘Ignorantia Juris Non Excusat’, Unawareness of GST Proceedings not Convincing: Madras HC sets aside Order with Pre-Deposit Condition Newlab F Apparels LLP vs The Assistant Commissioner CITATION: 2024 TAXSCAN (HC) 774

The Madras High Court set aside a GST assessment order, imposing a 10% pre-deposit condition for contesting the tax demand. The court dismissed the petitioner's claim of unawareness of GST proceedings, emphasizing compliance for registered entities. Despite this, it acknowledged communication gaps with their consultant and discrepancies in notices. The court directed the petitioner to deposit 10% of the disputed tax within two weeks and respond to a show cause notice by the same deadline. Following compliance, the Assistant Commissioner was instructed to grant a fair opportunity, including a personal hearing, and issue a new order within two months.

Madras HC directs Submission of Form GST ITC-02 as ‘NIL’ if No ITC Transferred, Subjects to 10% Pre-Deposit Condition M/s.GG Organics Care Private Limited vs The State Tax Officer CITATION: 2024 TAXSCAN (HC) 747

The Madras High Court directed GG Organics Care Private Limited to submit Form GST ITC-02, specifying 'NIL' if no Input Tax Credit (ITC) was transferred, as per legal requirements. The court ordered a reconsideration of a tax demand imposed following an audit initiated in September 2023 on GG Organics Care Private Limited, formed from a demerger of GG Organics Private Limited. The petitioner contested procedural irregularities in the audit process and argued against the necessity of filing Form ITC-02 due to no ITC transfer.

Justice Senthilkumar Ramamoorthy set aside the impugned order, instructing the petitioner to deposit 10% of the disputed tax within two weeks. The tax authorities were directed to provide a fair opportunity, including a personal hearing, and issue a fresh order within two months upon remittance. The court also allowed the petitioner to submit Form ITC-02 as per regulations.

100% Penalty Imposed Despite GST Liability Discharge: Madras HC disposes WP on Pre-Deposit Condition for Interest Liability M/s.Alamelu Construction vs The Assistant Commissioner of GST CITATION: 2024 TAXSCAN (HC) 871

The Madras High Court disposed of a writ petition concerning a pre-deposit requirement for interest linked to a 100% penalty imposed despite the discharge of GST liability. The court imposed the pre-deposit due to the expiration of the appeal filing deadline following proceedings initiated by a show cause notice on 27.02.2023. The petitioner settled GST liability multiple times before this notice. The court allowed the petitioner to appeal, contingent on remitting Rs. 2.5 lakhs within three weeks. No costs were awarded, and related petitions were closed.

GST Personal Hearing Notice sent through Registered Post: Madras HC orders to grant Hearing on 15% Pre-deposit M/s.Abi Constructions vs The State Tax Officer CITATION: 2024 TAXSCAN (HC) 1431

The Madras High Court mandated a personal hearing opportunity with a 15% pre-deposit condition. The court nullified a previous order for lack of a hearing before issuance. In the writ petition, Abi Constructions challenged an October 30, 2023, order, claiming no opportunity to contest the tax demand. The petitioner cited communication issues and a mismatch in tax filings. Despite reminders sent via Registered Post with Acknowledgment Due (RPAD), the court noted procedural lapses and set aside the order. It directed the petitioner to remit 15% of the disputed tax within fifteen days and respond to the show cause notice. The State Tax Officer was instructed to provide a fair hearing and issue a new order within three months upon compliance.

GST Liability of 8.3L Confirmed on alleged Misconception of Intra and Inter State Sales : Madras HC remands for Reconsideration on Pre-deposit M/s. Orient Electricals and Engineers India (P) Ltd vs Assistant Commissioner (ST)

In a recent ruling, the Madras High Court directed reconsideration of a Rs. 8.3L GST liability imposed on a Rs. 3 lakh pre-deposit condition. The petitioner's argument centered on documentary evidence proving only intra-state sales using Form-I and Form-WW. Despite procedural objections, the court found the tax assessment based on a misconception of inter-state sales. Justice Senthilkumar Ramamoorthy set aside the order, remanding the matter for review contingent on the petitioner remitting Rs. 3 lakhs and submitting a reply to the show-cause notice within three weeks. The court instructed a fair hearing and a new order within three months. The petition was disposed of without costs.

GST Liability Confirmed on GSTR 3B vs GSTR 2A Mismatch: Madras HC Mandates Reconsideration of 10% Pre-Deposit M/s.Crystal Granites rep vs The Assistant Commissioner (ST) CITATION: 2024 TAXSCAN (HC) 1269

The Madras High Court ordered reconsideration of a matter with a 10% pre-deposit condition due to discrepancies between GSTR 3B and GSTR 2A, following the petitioner's failure to respond to a Show Cause Notice (SCN). Crystal Granites challenged the order, arguing lack of awareness of the notice, but agreed to remit 10% of the disputed tax demand for reconsideration. The court set aside the impugned order, directing the petitioner to deposit 10% within two weeks and submit a reply to the SCN. The GST department was instructed to provide a fair opportunity, including a personal hearing, and issue a new order within three months of receiving the deposit and reply.

Rectification Filed on Error in Reporting Outward supplies & ITC : Madras HC remands GST Demand for Reconsideration on Pre-deposit Condition Vaji Motor vs Assistant Commissioner (ST) CITATION: 2024 TAXSCAN (HC) 950

The Madras High Court remanded a GST demand for reconsideration with a 10% pre-deposit condition, following a rectification filed for errors in reporting outward supplies and Input Tax Credit (ITC). Vaji Motor, a dealer in agricultural implements, asserted unawareness of proceedings leading to the order, accessible only via the GST portal. The court acknowledged rectification efforts and directed the petitioner to remit 10% of the disputed tax within two weeks and submit a reply to the show cause notice. A reasonable opportunity, including a personal hearing, was mandated before issuing a new order within three months. The writ petition was disposed of accordingly.

Unaware of Cess Liability During Early GST Implementation Period: Madras HC orders Personal Hearing on 15% Pre-deposit M/s.Kamatchi Stores vs The State Tax Officer CITATION: 2024 TAXSCAN (HC) 1327

The Madras High Court ordered a personal hearing on a 15% pre-deposit condition regarding a matter where the petitioner was unaware of cess liability during the early stages of GST implementation. Justice Senthilkumar Ramamoorthy noted that Section 75(4) of the GST Act mandates a personal hearing if an adverse order is proposed. Despite the petitioner admitting liability, they were not granted a personal hearing before the impugned order was issued.

The court set aside the order dated December 29, 2023, citing procedural deficiencies and remanded the matter with conditions. The petitioner must remit 15% of the cess amount within two weeks and submit a detailed reply to the show cause notice within the same period.

GST Proceedings on ITC known after Bank Account Attachment: Madras HC directs Fresh Adjudication on 10% Pre-deposit B K T Spin Dish Private Limited vs The State Tax Officer CITATION: 2024 TAXSCAN (HC) 1267

The Madras High Court set aside and remanded a matter concerning a 10% pre-deposit related to GST proceedings on Input Tax Credit (ITC). The court noted the petitioner's claim of being unaware of the proceedings until their bank account was attached in March 2024. Notices were uploaded on the GST portal only. The petitioner argued that ITC reversal was unjustified as they had invoices, proof of payment, and other documents from the supplier. The court agreed to reconsider the case, provided the petitioner remits 10% of the disputed tax demand within two weeks and submits a reply to the show cause notice. Upon compliance, the tax authorities were instructed to grant a fair opportunity for a personal hearing and issue a new order within three months. The writ petition was disposed of, and bank attachments were lifted.

GST: Taxpayer cannot approach High Court to avoid mandatory Pre-Deposits while availing Appellate Remedy, rules Kerala HC NICO TILES MADHAVAM vs THE STATE TAX OFFICER, STATE GOODS AND SERVICE TAX DEPARTMENT CITATION: 2022 TAXSCAN (HC) 130

The Kerala High Court ruled that M/s Nico Tiles cannot bypass mandatory pre-deposit by approaching the High Court under writ jurisdiction while an appeal is pending before the statutory appellate authority under the CGST Act, 2017. Justice Bechu Kurian Thomas emphasized that once an appeal is initiated, subsequent events cannot be used to avoid pre-deposit obligations. Dismissing the petition, the Court held that the statutory appeal should be pursued as per the law, and extraordinary jurisdiction under Article 226 of the Constitution is not warranted after invoking appellate remedies.

Unaware of GST Proceedings due to Lack of Communication by Consultant: Madras HC quashes Ex parte Order, Remands on 20% Pre-deposit Dhanasekaran Thenmozhi vs Deputy Commissioner CITATION: 2024 TAXSCAN (HC) 1167

The Madras High Court quashed an ex parte GST order and remanded the matter due to the petitioner, Dhanasekaran Thenmozhi, claiming lack of communication from her consultant regarding the proceedings. The court found violations of natural justice and noted the petitioner's eligibility for threshold exemption. A 20% pre-deposit condition was imposed for the remand, with instructions for the petitioner to reply to the show cause notice. The court directed the tax authority to provide a fresh hearing and issue a new order within two months upon compliance.

Madras HC grants another Opportunity to Explain Unreconciled Turnover Pertains to non-GST items on Pre-deposit of Rs. 50 Lakhs M/s.Prince Foundations Limited vs Assistant Commissioner (ST)(FAC) Kilpauk Assessment Circle CITATION: 2024 TAXSCAN (HC) 955

The Madras High Court granted the petitioner, Prince Foundations Limited, another opportunity to explain unreconciled turnover of approximately Rs. 58.34 crore, provided they remit Rs. 50 lakhs as a precondition. The petitioner, citing inability to respond earlier due to other legal proceedings, challenged a December 26, 2023 order. The court set aside the order, emphasizing principles of natural justice and the petitioner's possession of relevant documents. They directed the petitioner to remit Rs. 50 lakhs within three weeks, submit a reply to the show cause notice, and mandated the tax authority to conduct a fresh review and issue a new order within two months upon compliance.

CBIC Circular’s Procedure dealing GSTR 3B & 2A Disparity not applied: Madras HC allows to Contest Demand on 10% Pre-deposit M/s.Sri Lakshmi Silvers vs The State Tax Officer CITATION: 2024 TAXSCAN (HC) 810

The Madras High Court quashed an assessment order and allowed the taxpayer, engaged in the supply of base metals, to contest a tax demand under a 10% pre-deposit condition. The petitioner alleged non-application of procedural guidelines by CBIC in handling discrepancies between GSTR-3B and GSTR-2A returns. The court, acknowledging these claims, directed the petitioner to remit 10% of the disputed tax demand within two weeks and submit a reply to the show cause notice within the same period. Upon compliance, the assessing officer was instructed to conduct a fresh assessment within two months, including a personal hearing.

GST Authorities detain Consignment on ground that Supplier Wrongly Passed ITC to Buyer: Madras HC directs Buyer to Pre-deposit 200% of Maximum Penalty Haresh Kumar vs The Assistant Commissioner (ST) CITATION: 2023 TAXSCAN (HC) 832

Justice C. Saravanan of the Madras High Court directed the buyer to make a pre-deposit of 200% of the maximum penalty or provide a Bank Guarantee under Section 129(c) of GST laws. This was in response to Goods and Services Tax authorities detaining a consignment due to improper Input Tax Credit transfer by the petitioner's supplier. The court ordered release of the consignment upon furnishing a Bank Guarantee for the penalty balance or cash payment.

Madras HC directs Reconsideration of GST Order involving Unreported E-Way Bills in GSTR 1 on additional 5% Pre-Deposit Sri Ragava Paper vs The Deputy Commissioner (ST) Appeal-I CITATION:  2024 TAXSCAN (HC) 1341

In a recent ruling, the Madras High Court has set aside a GST assessment concerning unreported e-way bills in GSTR-1 statements. The petitioner agreed to pay an additional 5% pre-deposit, on top of the initial 10%, to appeal the earlier rejection due to limitation issues. The court found merit in providing another chance for the petitioner to contest the tax demand, remanding the matter for reconsideration with specific conditions. This includes remitting the additional 5% disputed tax within two weeks and allowing the petitioner to respond to notices issued by the tax authority.

Failure to respond to GST SCN and attend Personal Hearing on Grounds of Cancer Diagnosis: Madras HC allows Contest demand on Pre-deposit Tvl. B.L. Collection vs The Deputy Commercial Tax Officer CITATION: 2024 TAXSCAN (HC) 944

In a recent ruling, the Madras High Court allowed B.L. Collection, engaged in the business of cloth and apparel, to contest a GST demand on the condition of a pre-deposit. The petitioner, who had been diagnosed with cancer in 2021, cited their inability to respond to a Show Cause Notice and attend a hearing.

The court, after considering the petitioner's medical condition and principles of justice, set aside the earlier order and remanded the matter for reconsideration. The petitioner was required to deposit 10% of the disputed tax within two weeks and submit a reply to the notice during this period. Once confirmed, the respondents were instructed to provide a fair opportunity for the petitioner to present their case and issue a fresh order within three months.

GST Proceedings unawareness due to Complete Bed Rest, SCN non-replied: Madras HC directs 10% Pre-deposit to Contest Lakshmi and Co vs The Assistant Commissioner (ST) CITATION: 2024 TAXSCAN (HC) 951

In a recent ruling, the Madras High Court set aside GST liability orders due to the petitioner's unawareness of proceedings caused by health-related issues requiring complete bed rest on doctor’s advice. Lakshmi and Co., engaged in manpower supply, including tasks like cleaning and packing groceries, fruits, and vegetables, expressed inability to contest tax demands. They cited exemptions under Notification No.11/2017-Central Tax (Rate) but acknowledged non-exemption for manpower services related to fast-moving consumer goods. Despite notices and reminders issued by the tax authorities, the court acknowledged discrepancies in GSTR 3B returns and Form 26AS but granted the petitioners an opportunity to contest the demands.

The court set aside orders on the condition of remitting 10% of disputed tax within two weeks and submitting replies to show cause notices. Upon compliance, recovery actions like bank account attachment were lifted, and fresh orders were to be issued within three months.

ITC Misplacement in GSTR-3B, Not able to Reply Notices as uploaded in ‘Additional Notices’ Tab: Madras HC allows to Contest on 10% Pre-deposit Mr.Panjatcharam Kumaravel vs The Deputy State Tax Officer-I CITATION: 2024 TAXSCAN (HC) 1164

In a recent ruling, the Madras High Court allowed Panjatcharam Kumaravel, engaged in the business of distributing "Rich & Roy" sweets and snacks, to contest an order on a 10% pre-deposit condition concerning the misplacement of Input Tax Credit (ITC) in GSTR-3B. The petitioner had claimed inability to respond to notices uploaded in the Additional Notices Tab on the GST Portal.

The court noted discrepancies in the filing of GSTR-3B returns and found that all relevant notices and orders were duly issued and uploaded. Despite this, considering the petitioner's reasons, the court quashed the impugned order. It directed the petitioner to pay 10% of the disputed tax demand within four weeks and instructed the Assessing Officer to reassess the matter, providing a reasonable opportunity to the petitioner.

Chennai Water Board’s Activities and Exemption Scope Misinterpreted by Authorities: Madras HC remands Rs. 96 Cr GST Demand on Pre-deposit Chennai Metropolitan Water Supply and Sewerage Board vs The Additional Commissioner, CGST & Central Excise CITATION: 2024 TAXSCAN (HC) 1309

In a recent ruling, the Madras High Court set aside and remanded a Rs. 96 crore GST demand, along with interest and penalties, imposed on the Chennai Metropolitan Water Supply and Sewerage Board (CMWSSB). The board, responsible for water supply in Greater Chennai, contested the demand citing exemptions for governmental authorities under GST Notifications. The court noted errors in interpreting CMWSSB's activities and ordered a remand to reconsider the applicability of exemptions and the classification of its services. CMWSSB was directed to deposit Rs. 3 crores as a precondition for the remand, ensuring a fair hearing in the process.

GST liability confirmed on Non-Payment /Short Payment of Tax on Outward supplies: Madras HC grants Reasonable Opportunity on 10% Pre-deposit M.Nataraj vs The Assistant Commissioner (ST) CITATION: 2024 TAXSCAN (HC) 1407

In a recent decision, the Madras High Court granted the petitioner a chance to contest a GST liability after a 10% pre-deposit. The court set aside an order dated 30.10.2023 due to alleged breach of natural justice principles, noting that notices were only uploaded on the GSTN portal without other communication to the petitioner. The petitioner, represented by Mr. A. Satheesh Murugan, agreed to pay the 10% disputed tax demand as a condition for remand.

Justice Senthil Kumar Ramamoorthi directed the petitioner to deposit the 10% within two weeks and allowed submission of a reply to the show cause notice within this period. Upon compliance, the respondent was instructed to provide a fair opportunity, including a personal hearing, and issue a fresh order within three months. The court lifted the bank attachment associated with the assessment order, disposing of the writ petition and closing related petitions.

Duplication Found in Turnover Reconciliation and GSTR 3B and Form 26AS: Madras HC sets aside GST Demand Order on Pre-deposit Condition Vadim Infrastructure Private Limited vs The Commercial Tax Officer CITATION: 2024 TAXSCAN (HC) 866

In a recent case, Vadim Infrastructure Private Limited, engaged in engineering and construction services, challenged an assessment order dated 31.12.2023 primarily on grounds of breach of natural justice. The petitioner responded to audit notices and observations concerning turnover reconciliation and differences in GSTR 3B return and Form 26AS. The court acknowledged potential issues with turnover calculations and discrepancies in returns.

Justice Senthilkumar Ramamoorthy set aside the order and directed the petitioner to remit 10% of the disputed tax demand for certain issues and 5% for others from their attached bank account.

SCN uploaded in ‘Additional Notices’ Tab instead of ‘View Notices’ in GST Portal: Madras HC directs 10% Pre-deposit to Consider afresh Tvl. Sri Manikandan Plywoods vs The Assistant Commissioner CITATION: 2024 TAXSCAN (HC) 1165

In a recent ruling, the Madras High Court directed a 10% pre-deposit for reconsideration of a GST case where the Show Cause Notice (SCN) was erroneously uploaded in the 'Additional Notices' tab instead of the 'View Notices' tab on the GST portal. The petitioner, Sri Manikandan Plywoods, sought to quash the GST assessment order and consequential recovery notices issued by the Assistant Commissioner.

The court, citing principles of natural justice and precedent, allowed the writ petition. It set aside the assessment order, recovery notices, and Form GST DRC-13, directing the petitioner to deposit 10% of the tax component.

Payment of 10% Pre-Deposit from Electronic Credit Ledger instead of Electronic Cash Ledger: Patna HC holds GST Appeal Maintainable M/s Friends Mobile vs The State of Bihar CITATION: 2023 TAXSCAN (HC) 1967

In a significant ruling, the Patna High Court held a GST appeal maintainable where the petitioner paid the 10% pre-deposit from the Electronic Credit Ledger (ECRL). The Appellate Authority initially rejected the appeal for not paying from the Electronic Cash Ledger (ECL). Citing a Division Bench judgment and a relevant Ministry of Finance notification, the High Court emphasized that 10% can be paid from the ECRL. Despite a Supreme Court stay on parts of the Division Bench judgment, the High Court directed the appeal to be considered on merits, setting aside the previous rejection. The writ petition was allowed with these directions.

GST Auditor’s Alleged Failure to Inform Proceedings Results in Non-Response to Issued Notices: Madras HC quashes Order on Pre-deposit Condition S M J Marble & Granite vs The Assistant Commissioner (ST) CITATION: 2024 TAXSCAN (HC) 791

In a recent ruling, the Madras High Court nullified an order concerning S M J Marble & Granite GST proceedings due to alleged non-notification by their auditor. The petitioner, engaged in selling marble and granite, received notices post-audit, which they claimed unawareness of due to their auditor's lapse. Despite assertions from the respondent's counsel that adequate opportunities were given, the court set aside the order dated 28.12.2023. The matter is remanded for reconsideration with a requirement for the petitioner to deposit 10% of the disputed tax demand within two months. They are also allowed to respond to the show cause notice within this period.

Pre deposit Amount paid u/s 77(4) of OVAT Act for First Appeal cannot be treated against the Second Appeal: Orissa HC  M/s Swastik Agency vs Commissioner of CT & GST, Cuttack & Ors CITATION: 2023 TAXSCAN (HC) 1759

In a recent decision, the Orissa High Court upheld that a pre-deposit made under Section 77(4) of the OVAT Act for the first appeal cannot be applied to the second appeal. M/s Swastik Agency sought to overturn the second appellate authority's order, arguing they had already deposited the required pre-deposit amount. However, the Court ruled that according to Section 77(4) of the OVAT Act, pre-deposit is specifically for the first appeal and cannot be carried over to the second appeal. The petition was dismissed, affirming the Sales Tax Tribunal's decision of 02.07.2021.

Relief to Hitachi Systems: Madras HC sets aside GST DRC-07 Order Due to Lack of Document Response Opportunity with Pre-Deposit Conditions Hitachi Systems India Private Limited vs The Union of India CITATION: 2024 TAXSCAN (HC) 745

In a recent ruling, the Madras High Court set aside a GST DR C-07 order against Hitachi Systems India due to lack of opportunity to respond with relevant documents. Justice Senthilkumar Ramamoorthy observed that the assessment order was issued without giving the petitioner a reasonable chance to address alleged defects with appropriate documents. Hitachi Systems India Private Limited received an intimation regarding 12 defects on 23.01.2023, responded on 13.02.2023, and further replied to a show cause notice on 13.03.2023. Despite this, the impugned order issued on 20.12.2023 did not adequately consider their submissions. The court directed setting aside of the order and remanded the matter for reconsideration, contingent on the petitioner remitting 10% of the disputed tax demand within two weeks.

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