GST Proceedings Unknown Until Garnishee Proceedings: Madras HC Orders Reconsideration 10% Pre-deposit [Read Order]

The Madras High Court ordered reconsideration of the matter on 10% pre-deposit condition. The court noted the submission of the petitioner that the GST (Goods and Services Tax) proceedings were unknown until Garnishee Proceedings.

The Petitioner, Rana Granites claimed that they were unaware of the proceedings leading to the impugned order dated 27.07.2023. The primary reason cited was that the notice and the impugned order were only uploaded in the "View Additional Notices and Orders" tab on the GST portal, without any other mode of communication. The petitioner discovered the proceedings only when garnishee actions were initiated in March 2024.

The counsel for the petitioner submitted that the confirmed GST proposal pertained to a mismatch between GSTR-3B and the auto-populated GSTR-2A. The petitioner asserted that they had only availed of eligible Input Tax Credit (ITC) and would be able to establish this if given a chance. Additionally, the petitioner agreed to remit 10% of the disputed tax demand as a condition for the remand.

Mr. V. Prashanth Kiran, the Government Advocate, represented the first respondent - The Assistant Commissioner (ST) and argued that sufficient opportunities were provided to the petitioner. He pointed out that a Show Cause Notice dated 18.05.2023 was issued and a personal hearing was offered. However, the confirmed tax proposal was due to the petitioner's failure to respond to the show cause notice.

The high court observed that the confirmed tax proposal pertained to a mismatch between the GSTR-3B returns and the auto-populated GSTR-2A. Given that the petitioner did not reply to the show cause notice, the court determined that it was in the interest of justice to allow the petitioner an opportunity to contest the tax demand on its merits, with certain conditions imposed.

For the reasons outlined, the bench of Justice Senthilkumar Ramamoorthy set aside the impugned order dated 27.07.2023 and remanded the matter for reconsideration, subject to the following conditions:

1. The petitioner must remit 10% of the disputed tax demand within two weeks from the date of receiving a copy of the order.
2. Within the same period, the petitioner is allowed to submit a detailed reply to the show cause notice, including all relevant documents.
3. Upon receipt of the reply and confirmation of the 10% remittance, the first respondent is directed to provide a reasonable opportunity, including a personal hearing, and then issue a fresh order within three months from the date of receiving the petitioner's reply.

As a consequence of setting aside the assessment order, the garnishee order is also set aside. The writ petition was disposed of on these terms. Mr. A. Abdul Rahman appeared for the petitioner.

To Read the full text of the Order CLICK HERE

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