The Madras High Court recently set aside a non-speaking order issued by the Goods and Services Tax ( GST ) department, which had rejected a 60-page detailed objection on demand order in a single line.
The writ petitions challenging both an assessment order dated 30.06.2023 and a consequential rectification order dated 12.09.2023, was filed by the petitioner—a manufacturer of paper and paperboard specialising in recycled products.
The petitioner is registered under the TNGST Act, filed returns and paid applicable taxes for multiple financial years. However, on 18.08.2021, the petitioner received an Audit Note covering financial years 2017-2018, 2018-2019, and 2019-2020, later transferred to Tirunelveli Circle, resulting in a revised audit notice issued on 04.10.2021.
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Following several audit visits, a summary report detailing 38 defects was issued on 03.02.2022.
The petitioner submitted a response and requested additional time, which was denied. Subsequently, a final audit report on 22.02.2022 confirmed all 38 alleged defects.
Although a reference to a DRC-01A notice dated 11.03.2022 for 2018-2019 was included in the assessment order, the petitioner claimed it was never served. Later, a show cause notice was issued on 17.10.2022, setting out the same 38 defects.
After multiple personal hearings, the petitioner submitted a detailed objection with documentary evidence to address each defect.
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Despite these efforts, the GST department issued the impugned order on 30.06.2023, confirming 31 of the 38 defects without addressing the petitioner’s objections or providing reasons for their rejection.
The counsel for the petitioner submitted that the above infirmities are only illustrative and that the objections in respect of all the defects have been rejected in one line, although the petitioner has filed a detailed objection along with annexures running to more than 60 pages.
The petitioner argued that the defect concerning Input Tax Credit (ITC) claimed in 2018-2019 but noted in 2017-2018, was adequately justified through documentary evidence; however, the department dismissed the explanation without substantial reasoning.
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During the hearing, the respondent’s counsel agreed to re-do the assessment, acknowledging the deficiencies in the order.
Consequently, Justice Mohammed Shafeeq quashed the assessment order, treating it as a show cause notice, and directed the petitioner to submit objections on 03.10.2024. The respondent was instructed to issue a reasoned, speaking order after providing the petitioner an opportunity for a fair hearing.
Mr.Raghavan Ramabadran and Mr.R.Sureshkumar Additional Government Pleader appeared for both the petitioner and the respondents respectively.
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