GST Proceedings uawareness due to Complete Bed Rest, SCN non-replied: Madras HC directs 10% Pre-deposit to Contest [Read Order]

The Madras High Court set aside the order confirming Goods and Services Tax ( GST ) liability on non-response to Show Cause Notice ( SCN ) as the petitioner was not aware about the proceedings due to complete bed rest on advice of doctor.

The petitioners, Lakshmi and Co engaged in the business of manpower supply for various tasks including cleaning, ripening, sorting, and packing of groceries, fruits, and vegetables, raised concerns regarding their inability to contest the tax demands due to unforeseen circumstances.

They claimed unawareness of the GST proceedings leading to the impugned orders, citing health-related issues necessitating complete bed rest on doctor's advice from September 2023 as the reason for their inaction.

The counsel representing the petitioners argued that certain services provided by the petitioners, particularly those related to packing, labelling, etc fruits and vegetables, were exempted from GST under Notification No.11/2017-Central Tax (Rate) dated 28.06.2027.

However, they acknowledged that exemptions did not extend to manpower services related to fast-moving consumer goods. Additionally, they highlighted the attachment of the petitioner's bank account and the appropriation of a substantial sum, which they proposed would cover a significant portion of the 10% of the disputed tax demand.

The Government Advocate representing the respondent pointed out the issuance of notices in Form ASMT 10, show cause notices, and reminders regarding personal hearings preceding the impugned orders, indicating due process.

The court observed that the tax proposals arose from discrepancies between the petitioners' GSTR 3B returns and Form 26AS. The proposals were confirmed due to the petitioners' failure to respond to the show cause notices. However, considering the contention regarding exemptions and the circumstances leading to the petitioner's inability to contest the tax demands, the court deemed it just and necessary to provide them with an opportunity to do so.

Consequently, a single bench of Justice Senthilkumar Ramamoorthy set aside the impugned orders, subject to the condition that the petitioners remit 10% of the disputed tax demand for each assessment period within two weeks.

The petitioners were also permitted to submit replies to the respective SCNs within the specified period. Upon satisfaction of the remittance and receipt of the petitioner's replies, the respondent was directed to provide a reasonable opportunity, including personal hearings, and issue fresh orders within three months.

As a consequence of setting aside the original orders, the attachment of the bank accounts was lifted. The court disposed of the writ petitions in specified terms.

To Read the full text of the Order CLICK HERE

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