‘Ignorantia Juris Non Excusat’, Unawareness of GST Proceedings not Convincing: Madras HC sets aside Order with Pre-Deposit Condition [Read Order]

The Madras High Court sets aside the Goods and Service Tax ( GST ) assessment order with 10% pre deposit condition to contest the tax demand. The court observed that the unawareness of the GST proceedings was not convincing.

The bench of Justice Senthilkumar observed that “As a registered person under applicable GST enactments, the explanation of the petitioner that he was unaware of proceedings is not convincing”.

The petitioner, engaged in retail and wholesale trading of leather apparels, found themselves in a legal quagmire when an assessment order dated 25.10.2023 was issued against them.

Alleging lack of reasonable opportunity to contest the tax demand, the petitioner raised concerns regarding the communication gap between them and their consultant, who failed to inform them about crucial notices and proceedings.

The petitioner's counsel argued that the business, established as a limited liability partnership in 2019, lacked familiarity with GST compliance procedures. Furthermore, discrepancies between various notices and the impugned order raised doubts about the accuracy and fairness of the assessment.

On Contrary, the Government Advocate contended that the petitioner had been given multiple opportunities to contest the tax demand, as evident from the impugned order.

Upon careful examination of the documents and arguments presented, the court acknowledged the petitioner's Conundrum but emphasised the importance of compliance, especially for registered entities under GST enactments. Nonetheless, recognizing the significance of providing a fair chance to explain discrepancies in GSTR 3B and 2A , the Court set aside the impugned order subject to certain conditions.

The Madras High Court directed the petitioner to remit 10% of the disputed tax demand within two weeks and submit a reply to the show cause notice dated 07.08.2023 within the same period. Once these conditions were met, the Assistant Commissioner (ST) (FAC), was tasked with providing a reasonable opportunity, including a personal hearing, to the petitioner before issuing a fresh order within two months.

To Read the full text of the Order CLICK HERE

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