In a recent ruling, the Madras High Court held that Goods and Services Tax ( GST ) authorities cannot introduce new defects or issues in their orders that were not previously mentioned in the Show Cause Notices ( SCNs ).
Tvl. Senthil Hardwares, the petitioner filed a writ petition seeking to quash the order dated 27.04.2024 alleging it was illegal and arbitrary.
A notice (DRC 01) was issued to the petitioner on 19.04.2022 through the GST portal followed by a personal hearing on 27.04.2024 during which the petitioner submitted a detailed reply to the notice.
Afterward, the GST authorities issued a tax demand order including interest and penalty. The petitioner claimed that the amount demanded in the impugned order included components/defects not mentioned in the original notice (DRC 01).
Complete Draft Replies of GST ITC Related Notices, Click Here
The petitioner’s counsel argued that the respondent had accepted their reply to the notice, yet the impugned order imposed additional demands.
The respondent countered that the petitioner failed to produce adequate documentation to substantiate the valid availing of the Input Tax Credit (ITC).
Justice C. Saravanan observed that the impugned order violated the principles of natural justice, as the petitioner was not given prior notice regarding the defects mentioned in the reasoning of the order.
The court determined the reasoning behind the impugned order was unsustainable due to this procedural lapse. The court quashed the impugned order and remanded the case to the respondent for fresh adjudication.
The court directed the respondent to issue an additional addendum to the original notice within 45 days allowing the petitioner 30 days to respond. A fresh order was mandated to be passed on merits and in accordance with the law, within two months from the reply submission. The writ petition was allowed.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
