In a recent ruling, the Madras high court has directed to issue fresh order after hearing on issue of fraudulent ITC availment utilising the documents issued by non-existent supplier. The court set aside the order on pre-deposit condition as it was issued without providing hearing.
The petitioner, Muzamil N. had filed outward supply details in Form GSTR-1 under Section 37 and returns in Form GSTR-3B under Section 39 of the GST Act for the assessment year in question.
However, an inspection under Section 67 of the Act revealed that ITC was availed based on documents issued by a supplier who was found to be non-existent at the registered address.
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Following this discovery, a notice in Form DRC-01A was issued on December 16, 2022, through the GST portal, followed by a Show Cause Notice (SCN) on March 7, 2023.
The petitioner neither responded to the notices nor paid the tax amount, resulting in the issuance of the impugned assessment order.
The petitioner contested the order, arguing that the notices and the assessment order were uploaded only on the common portal and not served directly or by registered post, as mandated. They further claimed that their inability to access the portal had hindered their participation in the adjudication process.
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Further sought a fresh opportunity to present their case, offering to deposit 25% of the disputed tax amount. They relied on a recent judgment of the Madras High Court in M/s. K. Balakrishnan, Balu Cables vs. Assistant Commissioner of GST & Central Excise to support their plea for a rehearing.
After hearing the arguments, the court set aside the impugned order on the condition that the petitioner deposits 25% of the disputed tax within four weeks.
Justice Mohammed Shaffiq directed that against making the pre-deposit, the impugned order would be treated as a show-cause notice, allowing the petitioner to submit objections and supporting documents and also directed to lift the bank attachment.
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The GST authorities were instructed to consider these objections and pass a fresh order after granting the petitioner a reasonable opportunity for a hearing.
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