GST Proceedings on ITC known after Bank Account Attachment: Madras HC directs Fresh Adjudication on 10% Pre-deposit [Read Order]

The Madras High Court set aside and remanded the matter for fresh adjudication on 10% pre-deposit with regards to the order issued subsequent to the GST ( Goods and Services Tax ) proceedings on Input Tax Credit ( ITC ). The high court noted the claim of the petitioner that the proceedings came to know when the bank account was attached.

The petitioner claimed to be unaware of the proceedings until their bank account was attached in March 2024. The notices and orders had been uploaded only on the "View Additional Notices and Orders" tab of the GST portal and were not communicated through any other means.

The petitioner’s counsel submitted that the ITC was reversed based solely on the claim that the supplier was non-existent. However, the petitioner possessed invoices issued by the supplier, proof of payment, and other relevant documents. The counsel asserted that, if given the chance, the petitioner could demonstrate to tax authorities that the ITC was validly availed. Furthermore, the petitioner expressed willingness to remit 10% of the disputed tax demand as a condition for the case to be reconsidered.

Representing the respondents, Mr. C. Harsha Raj, the Additional Government Pleader, acknowledged the notice and highlighted that the impugned order was preceded by a notice in Form ASMT 10, a show cause notice, and opportunities for a personal hearing.

The bench of Justice Senthilkumar Ramamoorthy, examining the impugned order, noted that the tax proposal was based on supplies received from Kiran Distributors. The petitioner had submitted copies of relevant invoices, bank statements showing payments made to the supplier, and the pertinent ledger account. The court determined that justice required providing the petitioner an opportunity to contest the tax demand on merits.

Accordingly, the court set aside the impugned order dated September 27, 2023, conditional on the petitioner remitting 10% of the disputed tax demand within two weeks from receiving the court’s order. The petitioner is also allowed to submit a reply to the show cause notice within this period.

Further added that, once the 10% payment is confirmed, the respondent was directed to offer a reasonable opportunity for the petitioner to present their case, including a personal hearing, and to issue a fresh order within three months from receiving the petitioner’s reply. As a result, the bank attachment will be lifted.

The writ petition was disposed of accordingly. Mr.T.V.Muthu Abirami appeared for the petitioner.

To Read the full text of the Order CLICK HERE

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