GST Consultant filed Cryptic Reply without Evidence against SCN: Madras HC Allows to Contest Demand on 25% Pre-Deposit [Read Order]

In a recent ruling, the Madras High Court allowed a taxpayer to contest a GST ( Goods and Services Tax) demand order, which was confirmed on grounds that the GST consultant failed to provide a proper reply with evidence.

The petitioner, M/s.Star Brand Enterprises, a trader in cashew kernels, raisins, and toor dal, had challenged the impugned order dated 20.03.2024, passed by the GST authority confirming a demand of ₹69,62,780 along with interest and penalty. The demand was raised through a show cause notice issued on 15.12.2023.

The petitioner claimed that upon receiving the show cause notice, he engaged a GST consultant who attended the personal hearing on 05.03.2024 and requested time for submitting a detailed reply.

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However, instead of a comprehensive response with supporting documents, the consultant submitted a brief and cryptic reply merely denying the allegations. This led to the confirmation of the demand by the department.

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Adding to the petitioner’s woes, the business was subsequently shifted to a new location, and the impugned order was delivered to the earlier registered business address. As a result, the petitioner remained unaware of the order and only came to know about it after the expiry of the appeal period, in August 2024. Consequently, he was unable to file an appeal within the statutory timeframe.

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Before the Court, the petitioner expressed willingness to deposit 25% of the disputed tax and sought an opportunity to file a proper reply with necessary evidence and to be heard afresh.

The Senior Standing Counsel for the tax department did not oppose the prayer, leaving it to the Court’s discretion.

Accordingly, Justice Krishnan Ramasamy observed that although there was a lapse in submitting a detailed response to the show cause notice, the petitioner had provided a valid explanation for the delay and appeared genuinely interested in contesting the demand. Accordingly, the Court set aside the impugned order and granted the petitioner one more opportunity to present his case, subject to specific conditions.

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The Court directed the petitioner to deposit 25% of the disputed tax amount within four weeks, followed by filing a comprehensive reply along with relevant documents within two weeks thereafter. The respondent department was directed to provide a clear 14-day notice for personal hearing and thereafter pass appropriate orders on merits.

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To Read the full text of the Order CLICK HERE

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