In a recent ruling, the Madras High Court quashed the Goods and Services Tax ( GST ) DRC-07 order which confirmed the demand as the assessee failed to produce a separate balance sheet and Profit and loss account for the Tamil Nadu Branch. The bench observed that the authorities did not consider the petitioner’s response adequately.
The Petitioner, Tokyo Zairyo (India) Private Limited challenged the assessment order dated 29.12.2023 on the grounds of disregarding the petitioner’s reply. The petitioner, in response to an audit conducted under Section 65 of applicable GST enactments, had submitted a reply to the audit report on 28.11.2023. However, the impugned order was issued on 29.12.2023, seemingly without due consideration of this response.
During the legal proceedings, the petitioner’s counsel highlighted the fact that the reply submitted was labelled as unauthorised, and subsequently disregarded, solely because the petitioner was unable to attend the scheduled personal hearing.
On the other side, Mr. T.N.C. Kaushik, Additional Government Pleader representing the respondents, pointed out the petitioner’s failure to produce a separate balance sheet and profit & loss account for the Tamil Nadu branch, which apparently led to the confirmation of the tax demand.
Upon careful examination of the impugned order, a single bench of Senthilkumar Ramamoorthy stated that it became apparent that similar findings dismissing the petitioner’s responses were recorded across various audit observations. For instance, in addressing an audit observation regarding turnover reconciliation, the order stated that the petitioner’s reply was rejected as unauthorized due to their absence at the personal hearing, with the conclusion of the Audit Officer being upheld.
However, the court found this rationale for disregarding the petitioner’s reply unsatisfactory. It deemed the order flawed due to its failure to consider the petitioner’s response adequately. Consequently, the court set aside the impugned order dated 29.12.2023 and remanded the matter for reconsideration.
The court directed the respondent to afford a reasonable opportunity to the petitioner, including a personal hearing, and to issue a fresh order within two months from the date of receipt of the court’s decision. Additionally, all contentions were left open to the petitioner in the course of the remanded proceedings.
The writ petition was disposed of without any costs, with connected miscellaneous petitions being closed accordingly.
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