Failure to Respond to GSTR-3A Triggers Proceedings u/s 62 GST Act: Madras HC Grants Opportunity to Contest on Pre-deposit [Read Order]

The failure to respond to the GSTR-3A triggered the GST proceedings under Section 62 of the GST Act, 2017, where the Madras High Court granted an opportunity contest on 10% pre-deposit condition.

The assessee, Tvl.SMA TEX, filed a writ petition against the GST order. It was claimed that a notice for cancellation of the GST registration was received on 21.01.2019 and that such registration was cancelled on 27.02.2019.

On account of cancellation of the GST registration, the assessee asserted that he was unaware of proceedings culminating in the impugned assessment order under Section 62 until distraint proceedings were initiated.

The Section 62 proceedings are initiated when the GST payer failed to file the GST returns for within the prescribed time limit even after service of notice under section 46 of GST statute.

The petitioner's counsel argued that due to business losses, the registration was cancelled. He further asserted that the petitioner was unable to participate in the proceedings leading to the disputed order. It was agreed to make a pre- deposit of 10%.

The GST Department's counsel stated that the principles of natural justice were upheld by issuing a notice dated January 5, 2023, in Form GSTR 3A. It was argued that upon the petitioner's failure to file returns after receiving the notice, the assessing officer was compelled to assess the case based on best judgment under Section 62 of the GST laws.

The court acknowledged that the assessment was made on the best judgment basis because the petitioner failed to respond to the notice in Form GSTR 3A. However, considering the affidavit filed with the petition, the bench noted that the GST registration was cancelled and unable to carry his business due to financial issues.

Thus, the High Court bench of Justice Senthilkumar Ramamoorthy, on interest of justice decided to provide opportunity to the assessee to contest the GST demand on 10% predeposit condition. The order was set aside and directed the GST department to grant personal hearing opportunity.

Mr.C.Prabakaran and Mr. T.N.C.Kaushik, AGP (T) appeared for the assessee and respondents’ counsel respectively.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates