Complete Case Digest on Pre-deposits under GST and VAT - Part 2

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

Interim Relief to Flipkart: Supreme Court stays Patna HC’s Rejection of GST Appeal for Pre-Deposit from ECRL instead of ECL, issues Notice M/S FLIPKART INTERNET PVT. LTD. vs THE STATE OF BIHAR & ORS. CITATION: 2023 TAXSCAN (SC) 302

The Supreme Court has stayed the Patna High Court's rejection of GST appeals by Flipkart Internet, which were deemed non-maintainable due to pre-deposit payments being made from the Electronic Credit Ledger (ECRL) instead of the required Electronic Cash Ledger (ECL). The Supreme Court's stay affects Paragraphs 77 and 78 of the Patna High Court's order until Flipkart's special leave petition is resolved. The Patna High Court had previously ruled that pre-deposits must be made via ECL as stipulated by Section 107 of the CGST/BGST Act, and Flipkart's use of ECRL was deemed insufficient. The Supreme Court's decision halts the enforcement of this ruling, allowing for further legal deliberation on the validity of using ECRL for pre-deposits in GST appeals.

Supreme Court sets aside Gujarat HC order on Pre-condition of Furnishing Bank Guarantee for Bail of GST Offence MAKHIJANI PUSHPAK HARISH vs THE STATE OF GUJARAT CITATION: 2023 TAXSCAN (SC) 156

The Supreme Court, comprising Justice Krishna Murari and Justice Ahsanuddin Amanullah, overturned the Gujarat High Court's order requiring a bank guarantee for bail in a GST offense case. The appellant, arrested under Sections 69 and 132(1)(a) of the CGST Act for GST violations, had initially been granted bail by the Chief Judicial Magistrate (CJM) on the condition of providing a ₹3 crore bank guarantee. The Gujarat High Court later reduced this requirement to ₹1.5 crore. However, the Supreme Court found that imposing such financial conditions for bail was improper and set aside the Gujarat High Court's order. The Court granted bail without the need for a bank guarantee but upheld other conditions set by the CJM.

Supreme Court strikes down Retrospective Application to Amendment on Telangana VAT Act on Initiation of GST Regime THE STATE OF TELANGANA & ORS. vs M/S TIRUMALA CONSTRUCTIONS CITATION: 2023 TAXSCAN (SC) 267

The Supreme Court of India struck down the retrospective application of an amendment to the Telangana Value Added Tax (VAT) Act, which was introduced through an Ordinance on 17.06.2017, just 13 days before the one-year grace period provided by the 101st Constitutional Amendment Act for transitioning to the GST regime. The Ordinance aimed to extend the period of limitation and permit the reopening of assessments but was found to be outside the state's legislative competence after 01.07.2017, when GST was implemented.

The Telangana High Court had already invalidated the amendment on several grounds, including that the state had limited scope to amend its VAT Act to align with constitutional changes. The Supreme Court upheld this decision, confirming that the amendments made after the GST regime commenced were void due to lack of legislative authority.

The court also addressed a related issue from the Bombay High Court, which had read down the Maharashtra VAT Amendment Act and dismissed appeals against this judgment. The Supreme Court found the judgment of the Bombay High Court to be erroneous and invalidated the amendment requiring a pre-deposit, thus reinforcing the position that the VAT amendments post-GST implementation lacked legislative competence.

HIGH COURTS

GSTR 3B and GSTR 2A Mismatch: Madras HC sets aside GST Demand Order on 10% Pre-Deposit Tvl. Sri Sai Enterprises vs Deputy Commercial Tax Officer – II CITATION: 2024 TAXSCAN (HC) 1399

The Madras High Court has set aside a GST demand order, requiring the petitioner to remit 10% of the disputed tax amount. The court emphasised the importance of upholding natural justice and allowed the petitioner to challenge the tax demand, particularly regarding discrepancies between the petitioner’s GSTR 3B returns and the auto-populated GSTR 2A. The petitioner argued that the order, issued on April 10, 2024, violated natural justice principles and claimed they were unaware of the proceedings. The court acknowledged this and set aside the order, permitting the petitioner to submit a reply to the show cause notice within two weeks, along with the 10% remittance. The respondent is then instructed to provide a fair hearing and issue a fresh order within three months.

Madras HC finds GST SCN Reply Inadequate and not Self Explanatory, allows to Contest Order on 10% Pre-deposit Sri Sakthi Industries vs The Deputy State Tax Officer-I CITATION: 2024 TAXSCAN (HC) 1542

The Madras High Court ruled that the reply provided by Sri Sakthi Industries to a GST Show Cause Notice (SCN) was inadequate and not self-explanatory, leading the court to allow the company to contest the GST order on the condition of a 10% pre-deposit. Sri Sakthi Industries, which provides job work services to Sakthi Auto Component Limited, purchased capital goods in the financial year 2017-18. The petitioner explained in its reply to the SCN that the outward supply during that year was lower than the inward supply. However, the GST department argued that the reply lacked details and was not considered in the impugned GST order. The court, acknowledging faults on both sides, set aside the GST order, remanded the matter for reconsideration with a 10% pre-deposit requirement, and lifted the bank attachment.

Madras HC Accepts Hospital Discharge Summary for Non-Participation in GST Proceedings, Sets aside Order on Pre-deposit M/s.A.B.Impex vs The Deputy State Tax Officer-II CITATION: 2024 TAXSCAN (HC) 1632

The Madras High Court accepted a hospital discharge summary as evidence for A B Impex's non-participation in GST proceedings and set aside the GST demand order on the condition that the petitioner remits 10% of the disputed tax amount. The court found that the GST proposal was confirmed due to the petitioner’s failure to respond to the show cause notice, which they attributed to illness and the impact of the Covid-19 pandemic. The court lifted the bank attachment and allowed A B Impex to submit a reply to the show cause notice within the stipulated period.

GST liability confirmed on Purchase and Sales Turnover Mismatch: Madras HC allows Hearing Opportunity on 10% Pre-Deposit M/s. Ragul Steels vs The Deputy State Tax Officer-I CITATION: 2024 TAXSCAN (HC) 1401

The Madras High Court has granted a rehearing for cases where GST liability was confirmed due to mismatches in purchase and sales turnover, with a condition of a 10% pre-deposit. The petitioner challenged the order dated 23.12.2023, arguing a breach of natural justice, as they were unaware of the proceedings because the show cause notice and order were only uploaded on the GST portal. The court, acknowledging this, set aside the impugned order and required the petitioner to remit 10% of the disputed tax demand within 15 days. The petitioner is allowed to submit a reply to the show cause notice, and the respondent must provide a reasonable opportunity for a personal hearing and issue a fresh order within three months. The writ petition was disposed of, and related miscellaneous petitions were closed.

GST Demand Order passed in Violation of Natural Justice Principles: Madras HC disposes of Petition on Pre-deposit Condition Mr.Ogadram vs Assistant Commissioner CITATION: 2024 TAXSCAN (HC) 1414

The Madras High Court set aside a GST demand order and remanded the matter for reconsideration, subject to a 10% pre-deposit condition. The petitioner, M/s. Sri Bhavani Electricals & Hardwares, challenged the order on the grounds of a breach of natural justice, arguing that they were unaware of a show cause notice uploaded on the GST portal. The petitioner had reported a turnover of ₹6,37,595 in Form CMP-08, but the impugned order considered a turnover of ₹5,47,405, leading to a tax demand based on a mismatch with the supplier's GSTR-1 statement.

The court acknowledged the petitioner’s claim of unawareness and lack of participation in the proceedings and set aside the order. The petitioner must remit 10% of the disputed tax within 15 days and submit a reply to the show cause notice. The respondent is required to provide a reasonable opportunity for a personal hearing and issue a fresh order within three months of receiving the petitioner’s reply.

GST Demand Confirmed in absence of Reply of Assessee: Madras HC Remands Matter for Reconsideration on Condition of 10% Pre-deposit Arun Clothing & Co vs Assistant Commissioner CITATION: 2024 TAXSCAN (HC) 1413

The Madras High Court remanded a GST demand case for reconsideration, requiring the petitioner to make a 10% pre-deposit. The petitioner argued that the show cause notice and orders were only uploaded on the GST portal and not communicated through other means, leading to unawareness of the proceedings. The petitioner, represented by Mr. N. Murali, claimed a mismatch between GSTR 3B and GSTR 2A and agreed to the 10% pre-deposit for each assessment period as a condition for remand. The court, noting the petitioner’s lack of participation due to unawareness, set aside the orders and mandated that fresh orders be issued within three months after the petitioner fulfils the pre-deposit and submits a reply.

GST Order passed without proper Hearing: Madras HC sets aside Orders, Mandates 10% Pre-deposit M/s. Cannon Exports vs The Assistant commissioner CITATION: 2024 TAXSCAN (HC) 1168

The Madras High Court set aside GST orders and related proceedings, contingent on the petitioner making a 10% pre-deposit. The court also ordered the lifting of bank account attachments once the deposit is made. The original GST order was issued without granting the petitioner a proper hearing. The petitioner’s counsel, C. Rekha Kumari, argued that they were not served with the show-cause notice, and the orders were issued without their knowledge. The government advocate countered that notices were served to the same address where subsequent orders were delivered and were also uploaded to the official portal, making ignorance claims implausible. Despite this, the court found that the petitioner had not been granted an opportunity to be heard and set aside the orders. Justice P. B. Balaji directed the petitioner to deposit 10% of the disputed tax, after which they are to be given a hearing to present their case.

GST Demand Confirmed Without GSTR 9C Consideration: Madras HC Orders Pre-deposit of Rs. 2.50 Crore Renaatus Projects Private Limited vs State Tax Officer CITATION: 2024 TAXSCAN (HC) 991

The Madras High Court set aside a GST demand order against Renaatus Projects Private Limited, contingent on a Rs. 2.5 crore pre-deposit. The company, involved in large-scale projects, challenged the order due to a lack of awareness and incorrect tax calculations. The court noted the original proceedings were flawed, particularly in the miscalculation of turnover and failure to consider the GSTR 9C reconciliation statement. The petitioner is now allowed to submit a reply with supporting documents, after which the respondent must reassess the case and issue a fresh order within three months. The bank account attachment will be lifted once the deposit is made.

GST Liability on Non-Payment of Tax under RCM: Madras HC Sets Aside Order on 10% Pre-Deposit Tvl. KWATRA KARTEEK vs The Assistant Commissioner (ST)(FAC) CITATION: 2024 TAXSCAN (HC) 1282

The Madras High Court set aside a GST order issued under the Reverse Charge Mechanism due to an error in filing GSTR 3B returns by the petitioner, Kwatra Karteek. The petitioner claimed he was unaware of the proceedings due to his part-time accountant's failure to inform him. The court noted the tax demand resulted from an inadvertent filing mistake and ordered the petitioner to remit 10% of the disputed tax within three weeks. The petitioner can then submit a reply to the show-cause notice, and the respondent must reassess the case and issue a fresh order within three months.

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 to Abishek Suppliers, represented by its proprietrix, on the condition of a 10% pre-deposit after the petitioner failed to upload a reply regarding discrepancies between GSTR 1 and GSTR 3B returns. The petitioner received a show-cause notice on December 14, 2023, but could not upload the reply due to an inadvertent error. The court set aside the impugned order, allowing the petitioner to contest the tax demand by submitting the reply and the 10% deposit within two weeks. The respondent must provide a hearing and issue a new order within three months.

GST Returns Mismatch: Madras HC remands Demand Order on Grocery Shop Owner on Rs. 1.5L Pre-deposit Condition Santhinarayanan Santhoshkumar vs The Deputy State Tax Officer CITATION: 2024 TAXSCAN (HC) 1577

The Madras High Court remanded a GST demand order issued to a small grocery shop owner due to a returns mismatch, contingent on a ₹1.5 lakh pre-deposit. The petitioner failed to reply to previous notices as they were posted on the GST portal. The court quashed the order, allowing the petitioner to file a reply within 30 days and make the required deposit. The respondent must issue a fresh decision within three months, ensuring the petitioner is heard before the final order is passed.

‘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, requiring the petitioner to make a 10% pre-deposit to contest the tax demand. Justice Senthilkumar noted that the petitioner's claim of unawareness of the proceedings was unconvincing for a registered GST entity. The petitioner, involved in leather apparel trading, argued they were not given a fair chance to contest the demand due to poor communication with their consultant. Despite multiple opportunities, the court recognized the need for a fair hearing to address discrepancies in GSTR 3B and 2A. The court directed the petitioner to remit 10% of the disputed tax within two weeks and submit a reply to the show cause notice. The Assistant Commissioner (ST) was ordered to provide a personal hearing and issue a fresh 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 has directed GG Organics Care Private Limited to submit Form GST ITC-02, indicating ‘NIL’ if no Input Tax Credit (ITC) was transferred. The court set aside a tax demand order issued after an audit post-demerger and ordered reconsideration of the case. GG Organics Care challenged the demand, citing procedural issues, including an audit exceeding the three-month limit and claiming no ITC transfer. The court acknowledged these issues but required the petitioner to remit 10% of the disputed amount within two weeks and allowed for a personal hearing. A fresh order must be issued within two months, and Form ITC-02 can be filed as needed.

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

The Madras High Court quashed a GST demand order due to discrepancies between GSTR-3B and auto-populated GSTR-2A. The petitioner, unable to respond due to their auditor's illness, argued that the error in demand calculation should be addressed. The court required the petitioner to deposit 10% of the disputed amount within two weeks and allowed them to reply to the show cause notice. After receiving the deposit and reply, the department must provide a personal hearing and issue a new order within three months.

Calcutta HC directs GST Registrant to File application under Limitation act for Delay in Appeal as Pre Deposit already Made Jharna Das vs The Deputy Commissioner of State Tax CITATION: 2024 TAXSCAN (HC) 1729

The Calcutta High Court directed the petitioner, Jharna Das, to file an application under Section 5 of the Limitation Act, 1963, to seek condonation of delay in their GST appeal. The appeal was rejected solely due to a marginal delay, despite the petitioner having made the required 10% pre-deposit. The court noted that the appellate authority should have given the petitioner a chance to explain the delay. The court set aside the rejection order and allowed the petitioner to submit the delay condonation application within two weeks, with the appellate authority required to consider it in accordance with the law.

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 directed a personal hearing for the petitioner on a 15% pre-deposit condition after finding procedural deficiencies in the initial GST order. The petitioner, unaware of cess liability during the early GST period, was not given a personal hearing before the adverse order was issued. The court observed that Section 75(4) of the GST Act requires a personal hearing when an adverse order is proposed. It set aside the December 2023 order, remanded the case, and instructed the petitioner to remit 15% of the cess amount and submit a detailed reply within two weeks. The tax authorities were directed to provide a personal hearing and issue a new order within three months of receiving the reply. The court also lifted any bank attachments related to the initial assessment.

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 the GST order concerning Input Tax Credit (ITC) and remanded the case for fresh adjudication. The petitioner, unaware of the proceedings until their bank account was attached in March 2024, claimed that notices were only available on the GST portal and not communicated otherwise. The petitioner, who has relevant documentation to prove the validity of ITC, agreed to a 10% pre-deposit to have the case reconsidered. The court noted that while the petitioner had been provided notice and opportunities for hearings, they had not been given a fair chance to contest the tax demand. The court set aside the September 27, 2023 order, instructing the petitioner to remit 10% of the disputed amount and submit a reply within two weeks.

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 a taxpayer cannot use writ jurisdiction to bypass the mandatory pre-deposit requirement if the matter is already pending before the statutory appellate authority under the Central Goods and Services Tax Act, 2017. M/s Nico Tiles challenged several monthly assessment orders and GST registration cancellations before the High Court, arguing they were issued without jurisdiction. Justice Bechu Kurian Thomas stated that once an appeal is filed under Section 107 of the Act, the taxpayer must comply with the pre-deposit requirement and cannot later avoid it by citing subsequent events. The court dismissed the petition, emphasizing that the appellate process must be followed as prescribed by law and that extraordinary writ jurisdiction should not be invoked in such cases.

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

The Madras High Court has granted Prince Foundations Limited another chance to address the unreconciled turnover issue, conditioned on a Rs. 50 lakh pre-deposit. The petitioner, who received a show cause notice on September 29, 2023, for a turnover discrepancy of approximately Rs. 58.34 crore, claimed they could not respond due to concurrent SARFEASI Act proceedings. The court, recognizing the petitioner’s available documents to explain the turnover, set aside the December 26, 2023 order. The petitioner must remit Rs. 50 lakh and submit a detailed reply to the show cause notice within three weeks. The court ordered the respondent to provide a personal hearing and issue a fresh order within two months of receiving the reply and remittance.

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 has quashed the assessment order and allowed the taxpayer to contest the demand, providing a 10% pre-deposit. The petitioner, facing issues with discrepancies between GSTR-3B and GSTR-2A for the 2018-19 tax year, had failed to respond to notices due to reliance on their accountant and lack of awareness. The petitioner argued that procedural guidelines from the CBIC were not followed. The court, acknowledging the procedural issues and the taxpayer’s willingness to remit 10% of the disputed amount, set aside the original order.

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 petitioner to either pre-deposit 200% of the maximum penalty or provide a Bank Guarantee under Section 129(c) of the GST enactments. The consignment, detained due to issues with the supplier's Input Tax Credit, was ordered to be released upon submission of a Bank Guarantee for the remaining penalty or payment in cash. The petitioner had already paid 25% of the disputed penalty and filed an appeal under Section 107 of the CGST Act. The Court emphasised that the maximum penalty should be paid to balance the revenue's interest while considering the pending appeal.

GST Personal Hearing Notice unnoticed for 3 Times: Madras HC grants Opportunity to Contest on 10% Pre-deposit from ECR Tvl. Jeyaprakash vs The Deputy State Tax Officer-2 CITATION: 2024 TAXSCAN (HC) 1566

The Madras High Court granted the assessee a chance to contest a GST order, allowing a 10% pre-deposit from their Electronic Cash Register (ECR). The assessee missed several show cause and personal hearing notices due to oversight. The GST department argued that the petition was time-barred and that the appeal was also overdue. However, Justice C. Saravanan decided to quash the impugned order and remand the case for reconsideration, requiring the petitioner to deposit 10% of the disputed tax and file a reply within 30 days. The order will be treated as an addendum to the original show cause notice.

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

The Madras High Court has set aside a GST assessment order involving unreported e-way bills in GSTR-1 and ordered a reconsideration. The petitioner, who had already paid 10% of the disputed tax, agreed to remit an additional 5% as a condition for remand. The court noted that the petitioner had filed nil returns during the Covid-19 pandemic and was unaware of the proceedings due to prior notices. The court directed the petitioner to pay the additional 5% within two weeks and submit a reply to the show cause notice. Following this, the respondent is required to provide a personal hearing and issue a new order within three months.

Pre-deposit Done after Condonable Delay: Punjab and Haryana HC directs Hearing of Appeal, Calculates Limitation Period based on General Clauses Act M/s Splendor Landbase Limited vs Joint Commissioner of State Tax Gurugram and others CITATION: 2024 TAXSCAN (HC) 849

The Punjab and Haryana High Court addressed a case involving an assessment order dated 30.05.2023, with the appeal filed on 30.09.2023, just within the four-month statutory limit including a one-month condonation period. Despite the appellate authority rejecting the application for delay condonation, the court found the appeal timely under the General Clauses Act and noted the petitioner’s valid reasons for the delay. The court remanded the case to the appellate authority for reconsideration and allowed the petitioner to seek interim protection if needed.

Failure to respond GST SCN and attend Personal Hearing on Grounds of Cancer Diagnosis: Madras HC allows to 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 to contest a GST demand despite failing to respond to a Show Cause Notice or attend a personal hearing due to a cancer diagnosis. The court set aside the order dated 01.09.2023 and remanded the case for reconsideration, conditional on a 10% pre-deposit of the disputed amount within two weeks. The petitioner was also allowed to submit a reply to the show cause notice within this period. The respondents were directed to provide a reasonable opportunity for the petitioner to present their case, including a personal hearing, and issue a fresh order within three months. Any bank attachment related to the case was lifted, and the writ petition was disposed of without costs.

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

The Madras High Court granted Panjatcharam Kumaravel the opportunity to contest a GST order involving misplacement of Input Tax Credit (ITC) in GSTR-3B, on the condition of a 10% pre-deposit of the disputed tax. The petitioner, who had missed responding to notices due to errors in the GST Portal's “Additional Notices” tab, challenged the impugned order and sought a chance to address the Show Cause Notice. The court quashed the order and directed the petitioner to pay 10% of the disputed amount within four weeks. The Assessing Officer must reassess the case and issue a fresh order within six weeks.

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

Vadim Infrastructure Private Limited challenged the assessment order dated 31.12.2023 on the grounds of a breach of natural justice. The petitioner contended that discrepancies between turnover figures in GSTR 3B and Form 26AS led to the tax demand and sought a chance to contest it. The petitioner had responded to audit notices and provided clarifications, but the government claimed there were missed opportunities to submit documents.

The court identified potential duplications and discrepancies in the tax assessment and decided to set aside the impugned order. It allowed the petitioner to contest the tax demand if they deposited 10% of the disputed amount (excluding turnover reconciliation issues) and 5% for discrepancies. The petitioner was required to respond with all necessary documents within three weeks, after which a new order would be issued following a personal hearing. The court also directed that the bank account attachment be lifted upon payment of the specified amounts.

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

The Madras High Court recently set aside and remanded a case involving a Rs. 96 crore GST demand imposed on the Chennai Metropolitan Water Supply and Sewerage Board (CMWSSB). The court found issues with the original order, which misinterpreted CMWSSB's activities and incorrectly classified the water supply services. The board argued that its activities were exempt from GST under Notifications No. 12/2017 and No. 2/2017, which cover water supply for public purposes and local body activities. The respondents contended that GST applied to CMWSSB’s water distribution services.

The court noted two main problems: the incorrect classification of the water supply services and inadequate consideration of various supply methods. It decided that the case should be remanded for reconsideration of exemption applicability and service classification. To balance the interests of both parties, CMWSSB was required to deposit Rs. 3 crores as a precondition for remand. Upon receipt of this deposit, the board would be given a fair hearing and the opportunity to present its case.

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

The Patna High Court recently ruled that a Goods and Services Tax (GST) appeal, where a 10% pre-deposit was made from the Electronic Credit Ledger (ECRL), is maintainable. The Appellate Authority had previously rejected the appeal, stating that the pre-deposit should be made from the Electronic Cash Ledger (ECL). This decision followed a Division Bench judgment in M/s Flipkart Internet Pvt. Ltd. v. The State of Bihar & Ors. However, the Supreme Court stayed the observations in Paragraphs 77 and 78 of this judgment on December 4, 2023.

The Patna High Court also noted Notification No. 53/2023, which allows delayed appeals with a 12.5% pre-deposit, and indicated that even the GST Council recognizes payments through ECRL. The Court decided to set aside the January 10, 2023, order and directed the appeal to be considered on its merits. It clarified that the 10% pre-deposit need not be paid from the ECL, and the appeal should proceed without further insistence on this payment method.

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

The Madras High Court has set aside an order related to a Goods and Services Tax (GST) dispute involving S M J Marble & Granite, which was penalized due to non-responsiveness to notices. The petitioner, who sells marble and granite, failed to respond to a GST audit notice dated September 27, 2023, because they were not informed by their auditor. The court found that the petitioner was not given a proper opportunity to contest the tax demand before the impugned order was issued.

The court nullified the order dated December 28, 2023, and remanded the case for reconsideration, requiring the petitioner to remit 10% of the disputed tax amount within two months. Additionally, the petitioner is allowed to submit a reply to the show cause notice within the same timeframe. Upon receipt of the pre-deposit, the respondent is directed to provide a fair hearing and issue a new order within two months.

Stock from Sister’s Demolished Godown found During GST Inspection Triggers Liability: Madras HC allows to file Appeal on 25% Pre-Deposit Tvl.Solai Venkateshwara Stores vs The State Tax Officer CITATION: 2024 TAXSCAN (HC) 1568

The Madras High Court permitted Solai Venkateshwara Stores to file a GST appeal with a 25% pre-deposit requirement, related to a Rs. 2,027,846 demand arising from stock found during a GST inspection. The petitioner, whose husband's illness delayed their appeal, had already paid Rs. 100,000 in cash and Rs. 40,096 from their Electronic Credit Ledger. The court ordered the petitioner to file the appeal within 30 days and deposit the additional 25% of the disputed amount. The GST Appellate Deputy Commissioner was directed to process the appeal within 3 months. Failure to comply with these conditions would result in automatic revocation of the relief.

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

The Orissa High Court ruled that a pre-deposit made under Section 77(4) of the Orissa Value Added Tax (OVAT) Act for a first appeal cannot be applied to a second appeal. The petitioner, M/s Swastik Agency, argued that the pre-deposit amount should be considered for the second appeal, but the department contended that the pre-deposit was made after a significant delay and was only for the first appeal. The court confirmed that pre-deposit requirements apply only to the first appeal and not the second. Thus, the court upheld the second appellate authority’s decision and dismissed the writ petition.

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

The Madras High Court set aside a Goods and Services Tax (GST) order against Hitachi Systems India Private Limited due to lack of opportunity to present relevant documents. The petitioner received a notice on January 23, 2023, about 12 alleged defects, replied on February 13, 2023, and later addressed a show cause notice on March 13, 2023. Despite this, the final order was issued on December 20, 2023, disregarding some responses and documents provided by the petitioner.

Justice Senthilkumar Ramamoorthy found that the petitioner was not given a fair chance to address all defects. The court remanded the case for reconsideration, requiring the petitioner to remit 10% of the disputed tax within two weeks and allow submission of additional documents.

15 GST Discrepancies Addressed in Intimation, No Time Extension Granted Despite Request: Madras HC quashes GST Orders on Rs. 45L Pre-deposit Tvl. KCP Infra Limited vs The State Tax Officer CITATION: 2024 TAXSCAN (HC) 1249

The Madras High Court quashed the Goods and Services Tax (GST) assessment orders against Tvl. KCP Infra Limited, citing procedural issues and lack of opportunity for the petitioner to address discrepancies. The inspection in early 2023 revealed 15 discrepancies, including issues with Input Tax Credit (ITC) and turnover, which the petitioner responded to with detailed explanations. Despite this, the assessing authority issued a show cause notice and assessment orders without considering the petitioner’s replies and requests for extensions.

The court found that the petitioner had adequately addressed the discrepancies and argued that the assessment orders ignored their submissions. It directed that the assessment orders be set aside on the condition that the petitioner remits Rs. 20 lakh for the assessment year 2020-21 and Rs. 25 lakh each for the assessment years 2018-19 and 2019-20. The petitioner must also submit a reply to the show cause notice within two weeks. The assessing officer was instructed to provide a fair opportunity, including a personal hearing, and issue fresh orders within two months, adhering to the procedures outlined in Circular No.12/2022. The writ petitions were disposed of with these directions.

CBDT Instruction r/w OM does not mandate 20% Pre-Deposit for Granting Stay in Recovery Proceedings: Delhi HC directs AO to Reconsider CENTRE FOR POLICY RESEARCH vs DEPUTY COMMISSIONER OF INCOME TAX CITATION: 2024 TAXSCAN (HC) 1058

The Delhi High Court directed the Assessing Officer (AO) to reconsider the stay application for recovery proceedings in light of the NASSCOM case. The court found that the AO’s decision to require a 20% pre-deposit for granting a stay did not align with legal precedents and administrative instructions. The petitioner challenged the AO’s May 3, 2024, order which denied the stay application due to the failure to deposit 20% of the demand. This was based on CBDT’s Instruction No. 1914 and subsequent memoranda, which do not mandate a fixed percentage but allow for discretion.

The court highlighted that the AO’s order did not address the merits of the petitioner’s case or the issue of undue hardship. The court referred to the NASSCOM case, which established that the pre-deposit requirement is not mandatory but discretionary. As a result, the court set aside the AO’s order and remitted the case for reconsideration, directing the AO to apply the legal principles from the NASSCOM case. The appeal was allowed, and the matter was sent back for a fresh examination.

GST Consultant fails to inform GST Proceedings w.r.t. GSTR 3B vs 2A Disparity: Madras HC mandates 10% Pre-deposit for Remand Rishab Industries vs The Assistant Commissioner (ST) CITATION: 2024 TAXSCAN (HC) 1000

The Madras High Court ruled that a 10% pre-deposit is required for reconsidering a case involving Muthu Traders, who were unaware of Goods and Services Tax (GST) proceedings due to their consultant's failure to notify them about discrepancies between GSTR 3B and GSTR 2A. The petitioner, engaged in grocery trading, relied on a consultant for GST compliance. The tax demand arose from mismatches between their GSTR 3B returns and auto-populated GSTR 2A. The petitioner argued they had not been given a fair chance to explain the discrepancies and offered to remit 10% of the disputed amount as a condition for remand.

The court, recognizing the petitioner’s lack of awareness and the consultant’s failure, set aside the previous order. It remanded the case, requiring the petitioner to deposit 10% of the disputed tax within two weeks and submit a reply to the show cause notice. The respondents were instructed to provide a fair hearing and issue a fresh order within three months.

Accountant misses GST Notices uploaded in Additional notices and Order tab in Portal, fails to Reply to SCN: Madras HC allows to Contest on 10% Pre-deposit M/s.Raj Rekha, vs The Deputy State Tax Officer-II (FAC) CITATION: 2024 TAXSCAN (HC) 954

The Madras High Court allowed the petitioner to contest a Goods and Services Tax (GST) demand, provided they make a 10% pre-deposit. The case arose because the petitioner’s accountant failed to check GST notices on the portal. The petitioner argued they were unaware of the proceedings and that the tax demand related to credit notes issued by suppliers, asserting that Input Tax Credit was correctly availed net of these notes.

The court found that the petitioner should be given a chance to present their case. It set aside the order dated 31.07.2023 and required the petitioner to remit 10% of the disputed tax demand within two weeks and respond to the show cause notice. Upon receiving the reply and confirmation of the remittance, the respondent was directed to offer a fair hearing and issue a fresh order within three months.

Appellate Order issued without Hearing Petitioner, GST Dept Debits 37 % Pre-deposits from Electronic Credit Ledger: Madras HC remands Matter for Reconsideration Tvl. Raunaq Foundations vs The Deputy Commissioner CITATION: 2024 TAXSCAN (HC) 1408

The Madras High Court remanded the matter for reconsideration after an appellate order dated 28.03.2023 was issued without hearing the petitioner. The petitioner had appealed an order from 01.11.2019 concerning transitional Input Tax Credit (ITC) but did not receive hearing notices due to a change of business address.

The petitioner argued that, after the appeal was dismissed ex parte, the GST Department debited 37% of the disputed tax demand from their electronic credit ledger, including amounts previously remitted as pre-deposit. The court, finding that the petitioner was not given a chance to be heard, set aside the appellate order and directed the matter be reconsidered by the appellate authority. The writ petition was disposed of accordingly.

100% Penalty imposed on wrong ITC availment u/s 74 GST Act without Recording Reasons: Madras HC remands for Reconsideration on 10% Pre-deposit M/s.Jayasri Traders vs The Assistant Commissioner CITATION: 2024 TAXSCAN (HC) 1326

In a recent ruling, the Madras High Court addressed the imposition of a 100% penalty under Section 74 of the GST Act for erroneous Input Tax Credit (ITC) claimed by Jayasri Traders. The petitioner had corrected their ITC error and paid the tax dues on 12.09.2023 but faced a 100% penalty in the impugned order. The court found that the penalty was imposed without adequate justification.

The petitioner agreed to remit 10% of the cess demand as a condition for remand. The court set aside the order dated 28.06.2023, directing Jayasri Traders to submit a detailed reply to the show cause notice within two weeks and remitting the 10% cess demand. The court also required the first respondent to conduct a fair hearing and issue a revised order within three months, emphasising the need for clear rationale in penalty decisions under GST laws.

Management Change does not Justify Failure to Respond to SCN, Disparity in GSTR 3B, GSTR 1 and GSTR 9 confirms GST Demand: Madras HC quashes Order on 10% Pre-deposit Zulaikha Motors Private Limited vs The Assistant Commissioner of GST CITATION: 2024 TAXSCAN (HC) 841

In a recent ruling, the Madras High Court invalidated a GST demand order against Zulaikha Motors Private Limited, requiring a 10% pre-deposit for reconsideration. The court found that a change in management did not excuse the petitioner’s failure to respond to the Show Cause Notice (SCN) and intimation. The demand was based on discrepancies in GSTR 3B, GSTR 1, and GSTR 9 filings.

The petitioner, who argued that the new management was unaware of the proceedings, was directed to remit 10% of the disputed tax demand within two weeks and submit a reply to the SCN. The court set aside the impugned orders and required the respondent to provide a fair opportunity, including a personal hearing, and issue fresh orders within two months.

Rajasthan HC quashes VAT Demand against Corporate Debtor: Directs VAT Dept to Refund Deposit ‘Paid under Protest’ M/s UltraTech Nathdwara Cement Limited vs The Commercial Taxes Officer CITATION: 2022 TAXSCAN (HC) 350

The Rajasthan High Court, in a ruling by Justice Sandeep Mehta and Justice Vinod Kumar Bharwani, quashed a VAT demand against M/s. Binani Cement Limited and ordered the refund of pre-deposits made “under protest” with interest. The decision followed a previous judgment in the case of UltraTech Nathdwara Cement Ltd. vs. Union of India, which established that amounts deposited by the corporate debtor should be refunded. The court directed that the amounts deposited by M/s. Binani Cement Limited, including any pre-deposits made while filing appeals, be refunded to M/s. UltraTech Nathdwara Cement Limited, the successful resolution applicant, within 60 days.

Direction to pay 15% of Tax Amount during the Pendency of Adjudication is not valid: Gujarat HC VINOD KUMAR DUGAR vs STATE OF GUJARAT CITATION: 2023 TAXSCAN (HC) 259

The Gujarat High Court, comprising Justice Sonia Gokani and Justice Sandeep N. Bhatt, invalidated a tribunal order requiring Vinod Kumar Dugar to pay 20% of the tax amount during adjudication. Dugar, citing severe health issues, challenged the higher pre-deposit requirement. The court noted that previous orders allowed a 15% pre-deposit and had not been contested. The court found no valid reason to deviate from this precedent. Consequently, the court quashed the tribunal's order, directing that Dugar be required to deposit only 15% of the tax amount within four weeks. The concerned authority was instructed to accept this revised pre-deposit amount.

10% of Disputed Tax Amount to be Deposited for filing Appeal u/s 107(6) of GST Act: Karnataka HC M/S TEJAS ARECANUT TRADERS vs JOINT COMMISSIONER OF COMMERCIAL TAXES (APPEALS) CITATION: 2024 TAXSCAN (HC) 112

The Karnataka High Court ruled that under Section 107(6) of the CGST Act, 2017, only 10% of the disputed tax amount needs to be deposited for filing an appeal, not 10% of the total assessed amount including penalties, fees, or interest. The appellate authority had earlier rejected the petitioner’s appeal for failing to deposit the required amount. The petitioner challenged this, arguing that the deposit mandate was misapplied. Justice Sachin Shankar Magadum agreed, stating that the law requires a 10% deposit only of the tax liability itself, not additional penalties or fees. Consequently, the court found the appellate authority’s decision unsustainable and directed that only the 10% of the tax amount, excluding other charges, should be required for the appeal.

Kerala High Court Orders Immediate Deposit of 20% of Disputed Tax in VAT Appeal to Halt Revenue Recovery M/s CHERAKULAM TOWERS & HIGHWAY RESORT vs ASSISTANT COMMISSIONER CITATION: 2023 TAXSCAN (HC) 1542

The Kerala High Court directed M/S. Cherakulam Towers & Highway Resort to deposit 20% of the disputed tax amount within 15 days to suspend revenue recovery actions until their appeal is resolved. The petitioner had sought a writ to expedite their appeal and halt recovery proceedings, arguing that they should not be required to translate vernacular documents. The court, noting the failure to make a pre-deposit while filing the appeal, ordered the 20% deposit to keep the recovery notice in abeyance. The petitioner must comply within 15 days to avoid immediate recovery actions until the appeal is decided.

Rejection of Revision of Assessment request reveals VAT Order of 1.6cr has been passed in Undue Haste: Madras HC sets aside Order P.C.S.Trades vs The Commissioner of Commercial Taxes CITATION: 2024 TAXSCAN (HC) 1386

The Madras High Court set aside a VAT assessment order involving significant amounts for the Assessment Years 2014-2015 and 2015-2016, requiring a 10% pre-deposit. The court found that the assessment orders issued on September 28, 2022, were made in haste, ignoring the petitioner’s timely requests for additional time and supporting documents. The petitioner, P.C.S. Trades had contested the imposition of purchase tax under Section 12 of the Tamil Nadu Value Added Tax Act, 2006 (TNVAT Act).

Despite earlier favourable resolutions for similar issues, the recent assessment orders were deemed premature. The court mandated that the petitioner deposit 10% of the disputed tax amount, attend a personal hearing, and cooperate fully with the reassessment process. The second respondent was directed to consider the recent favourable assessment orders for the previous years, if relevant.

Madras HC Remands GST Order Estimating Outward Supply at 110% of Purchase Value by Invoking Rule 30 Tvl. Harshini Exports vs The State Tax Officer CITATION: 2024 TAXSCAN (HC) 1544

The Madras High Court remanded a GST order that estimated outward supply at 110% of the purchase value using GST Rule 30, setting aside the order for reconsideration with a 10% pre-deposit condition. Harshini Exports, engaged in textile trade, had not been properly notified of proceedings until a bank attachment notice was served in May 2024. The petitioner argued that Rule 30 was improperly applied and that discrepancies could have been clarified by requesting details of closing stock under Sections 70 or 71 of the GST Act. The court found that while principles of natural justice were followed, the use of Rule 30 was contested and thus remanded the case for further review with the pre-deposit condition.

GST order Published on Portal But Not Intimated to Assessee: Madras HC allows Time to file Statutory Appeal Mrs.Nirmala Menon vs Assistant Commissioner CITATION: 2022 TAXSCAN (HC) 753

The Madras High Court has permitted Ms. Nirmala Menon to file a first appeal under Section 107 of the Tamil Nadu Goods and Services Tax Act, 2017, despite the appeal being filed beyond the statutory time limit. The challenge arose because the assessment order dated 28.01.2022 was published on the GST portal but not communicated to the petitioner through any direct means. The petitioner only became aware of the order when recovery actions were initiated. The court noted the lack of objection from the respondent and granted the petitioner an additional two weeks to file the appeal. The appeal, if filed within this period, will be accepted without reference to the limitation period but must meet all other statutory requirements, including the pre-deposit.

Failure to Deposit Assessed Penalty Amount as Mandated by GST Act: Kerala HC dismisses Writ Petition TIKENDRA SINGH RITHAL vs THE STATE TAX OFFICER CITATION: 2024 TAXSCAN (HC) 1297

The Kerala High Court dismissed Tikendra Singh Rithal's writ petition for failing to deposit 20% of the assessed tax/penalty as required by Section 112(8)(b) of the Goods and Services Tax (GST) Act, 2017. The petitioner had challenged a GST order issued by the Joint Commissioner (Appeals) and sought relief from the High Court due to the non-constitution of the Appellate Tribunal. The court had previously ordered the petitioner to deposit 20% of the assessed penalty by April 9, 2024, to avoid dismissal of the writ petition. Despite this, the petitioner did not comply with the deposit requirement. As a result, the court ruled that the writ petition could not be sustained and dismissed it.

Alleged Erroneous 100% Penalty Imposed under CGST Act for Period Falling under VAT Regime: Madras HC directs Statutory Appeal Shri. J.Milton Jeba Manickam vs The Assistant Commissioner of Central GST CITATION: 2024 TAXSCAN (HC) 1025

The Madras High Court directed petitioner J. Milton Jeba Manickam to file a statutory appeal under Section 107 of the CGST Act, 2017, challenging an assessment order dated January 17, 2024. The petitioner disputed the 100% penalty imposed for the years 2018-2019 and 2019-2020 and alleged the order breached the limitation period for the assessment year 2017-2018. The respondent's counsel argued that the petitioner’s failure to provide records for the VAT period justified the penalty. The court found that the matter involved disputed questions of fact not suitable for interference under Article 226 of the Constitution and thus directed the petitioner to pursue a statutory appeal. The court allowed a 30-day period for filing the appeal and required the petitioner to pre-deposit the necessary amount.

Provision of Appeal u/s 65 of KVAT Act to be Availed for filing Appeal against Assessment Order: Kerala HC dismisses Writ Petition JENSON M. JOY vs COMMERCIAL TAX OFFICER CITATION: 2023 TAXSCAN (HC) 1670

The Kerala High Court dismissed a writ petition filed against an assessment order issued by the 3rd respondent on remand by the appellate authority. The court noted that Section 65 of the Kerala Value Added Tax Act, 2003 (KVAT Act) provides an appeal mechanism against such assessment orders, and the petitioner should have utilized this remedy instead of approaching the High Court. The court observed that the petitioner could still file an appeal within fifteen days from the dismissal of the writ petition. If the petitioner had previously deposited 10% of the disputed amount, they would not need to make a second deposit. The appeal, if filed timely, would be heard and decided expeditiously.

Calcutta HC allows Petition as Temporary Respite to Taxpayers awaiting Operationalization of GST Appellate Tribunal Amit Kumar Singh vs The Assistant Commissioner of State Tax CITATION: 2024 TAXSCAN (HC) 1517

The Calcutta High Court granted temporary relief to taxpayers, including petitioner Amit Kumar Singh, due to the non-operational status of the Goods and Services Tax (GST) Appellate Tribunal. Singh challenged an order under Section 74 of the West Bengal GST Act and an appellate order dated January 9, 2024. As the Appellate Tribunal has not been constituted, Singh argued for exemption from the usual pre-deposit required for appeals under Section 112 of the GST Act, citing significant hardship caused by the COVID-19 pandemic.

The State respondents, represented by Mr. Siddiqui, contended that the writ petition should not proceed unless taxes are paid or secured. Justice Raja Basu Chowdhury ruled that the petitioner must deposit 5% of the remaining disputed tax with GST authorities, in addition to any previous deposits made. The court also directed that all documents filed with the Appellate Authority be compiled into a paper book for review.

Taxpayers Must Regularly Monitor GST Portal; Unawareness as Justification Not Convincing: Madras HC Tvl. Gayatri Granites Represented by its Partner VS The Assistant Commissioner CITATION: 2024 TAXSCAN (HC) 990

The Madras High Court remanded a GST case involving Gayatri Granites, a granite supplier, with a 10% pre-deposit condition. Justice Senthilkumar Ramamoorthy noted that as a registered GST entity, the petitioner should regularly monitor the GST portal. The petitioner argued that notices and orders were only available on the GST portal and not communicated directly, which led to their unawareness of the proceedings.

Despite the petitioner’s claim of unawareness, the court found the explanation insufficient. The tax demand arose from a mismatch between GSTR 3B returns and GSTR 2A. The petitioner agreed to remit 10% of the disputed tax amount for reconsideration. The court emphasized the petitioner’s responsibility to monitor the GST portal and set aside the impugned order, remanding the matter with the condition of a 10% pre-deposit within two weeks.

Non-Submission of Goods Movement Proof Confirms GST Liability: Madras HC Grants Second Chance to Contest Demand Ravi Chitra vs Assistant Commissioner CITATION: 2024 TAXSCAN (HC) 1528

The Madras High Court granted Ravi Chitra, the petitioner, a second chance to contest a GST demand, conditional on a 20% pre-deposit. Chitra was initially alleged to have wrongfully claimed GST Input Tax Credit (ITC), with the GST liability confirmed due to non-submission of proof for the movement of goods.

Chitra, who had responded to the show cause notice with supporting documents including tax invoices and bank statements, was unaware of the GST proceedings due to reliance on a tax consultant. The court noted that while some documentation was provided, crucial evidence like e-way bills and lorry receipts, necessary to prove the actual movement of goods, was missing.

Justice Senthilkumar Ramamoorthy's bench set aside the original order and remanded the case for reconsideration. Chitra was directed to deposit 20% of the disputed amount within two weeks and allowed to submit additional evidence to support the claim of goods' movement. The court also ordered the release of the bank account attachment.

Incomplete Review of E-Invoice and E-Way Bills: Madras HC Criticises GST Dept, remands Order M.R.V.Traders vs Assistant Commissioner CITATION: 2024 TAXSCAN (HC) 1530

The Madras High Court set aside a GST order and remanded the matter for reconsideration due to insufficient examination of key documents by the GST department. The bench, led by Justice Senthilkumar Ramamoorthy, found that the department had not properly reviewed the e-invoices and e-way bills submitted by M. R. V. Traders, leading to a premature conclusion that the petitioner failed to prove the movement of goods.

The petitioner, represented by Sivakumar, had responded to a show cause notice alleging wrongful GST Input Tax Credit (ITC) with relevant documents, including invoices and e-way bills. Despite this, the GST order dated 17.08.2023 reversed the ITC without adequate review.

The court criticised the department for not considering these documents thoroughly and granted a 10% pre-deposit condition for reconsideration. The case was remanded, allowing the petitioner to submit additional evidence. The court also annulled the assessment order and lifted any related bank attachments.

GST Registered Person must Respond to SCN Despite dropped Scrutiny Proceedings: Madras HC M/s.Sri Velavan Traders vs The State Tax Officer CITATION: 2024 TAXSCAN (HC) 1529

The Madras High Court recently ruled that a GST-registered person must respond to a show cause notice (SCN) even if scrutiny proceedings are dropped. The bench of Justice Senthilkumar Ramamoorthy emphasized that the responsibility to respond to the SCN remains regardless of the status of scrutiny proceedings.

The petitioner, M/s. Sri Velavan Traders, argued that they were unaware of the proceedings and believed no further action would be taken after the scrutiny was dropped. The petitioner claimed that the GST department did not consider a reconciliation statement (Form 9C) before confirming a tax proposal related to excess GST Input Tax Credit (ITC).

The GST department countered that the petitioner had multiple opportunities to respond and that the initiation of proceedings under Section 73 was valid despite the drop in scrutiny. The court noted that the petitioner admitted to not participating in hearings but agreed to remit 5% of the disputed ITC and 10% of other disputed amounts. The court set aside the contested order, allowed the petitioner to respond to the SCN within three weeks, and mandated a pre-deposit of the disputed amounts as a condition for reconsideration.

Inability to Monitor GST Portal Amidst Staffing Shortage: Madras High Court allows Construction Company to file Statutory Appeal Beyond Limitation Period SRM Engineering Construction Corporation Limited vs The Assistant Commissioner CITATION: 2023 TAXSCAN (HC) 1505

The Madras High Court has allowed SRM Engineering Construction Company Limited to file a statutory appeal despite missing the deadline. The company, facing issues with staff shortages, failed to respond to a GST notice and subsequently missed the appeal deadline.

The court cited a Supreme Court decision indicating that challenges beyond the statutory period cannot be made under Article 226 of the Constitution. However, it condoned the 58-day delay based on the company's explanation of declining business and insufficient staff to monitor the GST portal.

The dispute involved an assessment order issued on 23.02.2023, related to discrepancies between GSTR1, GSTR 3B, and ITC differences. The company only learned of the issue through a recovery notice on 24.07.2023 and promptly responded on 27.07.2023, but this response was not considered by the GST authorities.

The court directed the company to file an appeal within 30 days of receiving the order and required a pre-deposit as per Section 107 of the GST Act, 2017. The Appellate Commissioner is tasked with adjudicating the appeal on its merits.

Deposit of 20% of GST Demand assessed as per Assessment Order: Kerala HC dismisses Review Petition CARBORUNDUM UNIVERSAL LTD vs THE SUPERINTENDENT OF CENTRAL TAX AND CENTRAL EXCISE CITATION: 2023 TAXSCAN (HC) 2042

The Kerala High Court dismissed Carborundum Universal Ltd.'s review petition, which sought to overturn an order requiring the company to deposit 20% of the assessed GST demand. The order dated 07.12.2023 mandated this deposit within three weeks and kept the remaining demand in abeyance until the writ petition's disposal. Justice Dinesh Kumar Singh found no apparent error in the original order and thus denied the review. The petitioner was advised to file a modification application if necessary.

Also read: Complete Case Digest on Pre-deposits under GST and VAT – [Part 1]

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