The Madras High Court overturned the order due to the absence of a personal opportunity provided and as authorities calculated Goods and Services Tax ( GST ) liability based on an assumed turmeric sale within 18 months.
The petitioner, son of the late Kandappagounder Muthu, a registered GST taxpayer engaged in turmeric trading, challenged an assessment order, initiating proceedings for the assessment period 2017-18.
The counsel for the petitioner contested the order on several grounds. Firstly, challenging the invocation of Section 74 of GST enactments, arguing insufficient evidence of suppressed sales.
Secondly, disputing the assumption of deemed sales within 18 months, contrary to the show cause notice, without affording a personal hearing to the petitioner. Lastly, contesting the imposition of tax liability for a sale in February 2019, falling under the subsequent assessment period.
Mr. V. Prashanth Kiran, Government Advocate, argued for the respondents, justifying the invocation of Section 74 based on nil returns filed and lack of evidence regarding closing stock. He contended that suppressed sales were inferred from purchases made and absence of account books.
The court observed that the Show Cause Notice ( SCN ) alleged that purchases in 2017-18 amounted to Rs. 1,13,86,912, treating nil returns as suppressed sales and imposing tax liability.
However, the impugned order assumed processed turmeric should be sold within 18 months, deeming a sale in February 2019 without providing a basis or notice to the petitioner. Furthermore, no personal hearing was offered, violating statutory provisions. Hence, the bench observed that the impugned order is deemed unsustainable.
A Single bench of Justice Senthilkumar Ramamoorthy set aside the impugned order and remanded the matter for reconsideration. The petitioner was allowed to submit additional documents within four weeks, with the respondent instructed to provide a personal hearing and issue a fresh order within two months. All contentions were left open for the petitioner during the remanded proceedings.
The writ petition was disposed of accordingly.
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