The Madras High Court, noting that the petitioner had settled the entire tax liability for one financial year and 50% for another, ensured that the revenue’s interests were protected. Consequently, the court set aside the Goods and Services Tax ( GST ) demand orders.
The petitioner submitted that he is a works contractor executing civil work for government departments and local authorities. He received an intimation and show cause notice in relation to alleged discrepancies between the GSTR 1 and 3B returns, on the one hand, and the GSTR 2A return on the other.
Despite appearing in person before the respondent and making payments towards tax liabilities, the petitioner was not afforded the opportunity to contest the issued orders. Consequently, the petitioner seeks another chance to contest the tax demand on its merits.
The Legal counsel for the petitioner submitted that they have discharged the entire tax liability for the assessment period of 2019-2020 and approximately 50% for the assessment period of 2021-22. However, the impugned orders were issued without granting the petitioner a hearing, though both an intimation and show cause notice were served.
A Single bench of Justice Senthilkumar Ramamoorthy noted that “The impugned orders were issued without hearing the petitioner. Without doubt, the petitioner cannot be absolved of responsibility in such regard inasmuch as both an intimation and show cause notice were issued to the petitioner.”
Nevertheless, it was observed that the petitioner has fulfilled the entire tax liability for the financial year 2019-20 and approximately 50% of the tax obligation for the financial year 2021-22, securing the interest of the revenue.
Given these circumstances, the High Court deemed it fair and reasonable to afford the petitioner another opportunity to challenge the tax demand, interest, and penalty on their merits.
The Madras High Court set aside the impugned orders and remanded for reconsideration. The petitioner has been granted a 15-day window to respond to the show cause notice, following which the respondent is directed to provide a reasonable opportunity for a personal hearing. Fresh orders are expected within two months from the receipt of the petitioner’s reply.
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