The Madras High Court set aside the GST demand order, acknowledging that the petitioner failed to respond to the show cause notice ( SCN ) due to a lack of information about the proceedings.
The writ petition was filed by the Petitioner, Tvl. Ispeel Solution Private Limited, challenging an order issued by the State Tax Officer, Nanganallur Assessment Circle. The impugned order, dated 23.01.2024, related to the tax period from April 2018 to March 2019.
The petitioner claimed that they were not provided with a reasonable opportunity to contest the tax demand due to a lack of information about the proceedings. The auditor engaged by the petitioner failed to inform them about these proceedings, and the petitioner had limited knowledge of computer systems to obtain the necessary information.
R. Hemalatha, counsel for the petitioner, submitted that the tax proposal pertains to the mismatch between the petitioner’s GSTR 3B returns and the GSTR 1 statement as also between the GSTR 3B returns and the auto populated GSTR 2A. If provided an opportunity, the petitioner would be in a position to explain the mismatch.
On behalf of the respondent, K. Vasanthamala contended that the impugned order was preceded by a notice in Form ASMT 10 dated 10.07.2023, a show cause notice dated 24.09.2023, and several reminders for a personal hearing. The respondent maintained that the petitioner failed to respond to these communications.
Justice Senthilkumar Ramamoorthy noted that the tax proposal was confirmed only on account of the petitioner not replying to the show cause notice or appearing for the personal hearing. Considering the petitioner’s assertion of being unaware of the proceedings, the court found that the interest of justice warranted providing the petitioner an opportunity to contest the tax demand on merits.
The court set aside the demand order and imposed a condition for remand, requiring the petitioner to remit 10% of the disputed tax demand within two weeks from the receipt of the court order. The petitioner was also permitted to submit a reply to the show cause notice within this period.
The respondent was directed to provide a reasonable opportunity for the petitioner, including a personal hearing, and to issue a fresh order within three months on receipt of the reply and verification of the remittance.
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