The Madras High Court recently directed a Phone Seller who claimed to be unable to locate Goods and Services Tax ( GST ) adjudication Orders against him on the online Portal to pay out 25% of the disputed tax to further the assessment proceedings.
A Writ Petition was instituted before the Madras High Court by Tvl. Bhawar Life Style against The State Tax Officer/Commercial Tax Officer, Group I, Intelligence-I, Chennai seeking quashal of the impugned order and consequential DRC-07 Order passed by the Respondent Tax Officer.
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Bhawar Life Style is a retail seller of telephone sets and other wireless network products covered under HSN Code 85171290, 85044090, 64021910 and 43031020 and conducts business operations in Karnataka, Andhra Pradesh, Kerala, Puducherry and Telangana. An inspection was conducted at the Petitioner’s place of business as per Section 67 of the Tamil Nadu Goods and Services Tax Act, 2017.
The search at the business premises revealed significant compliance lapses, including irregularities in ITC claims and reversals, discrepancies in financial records (expenses, income, creditors, and debtors), e-way bill violations, and misclassification of transactions (non-supplies, write-offs, and asset additions). These issues indicate potential tax evasion, underreporting of income, and weak internal controls requiring immediate corrective measures.
Revenue authorities issued notice and show-cause notice in Form DRC-01A through the GST portal, followed by 3 reminder notices on separate occasions along with an opportunity of personal hearing, all of which went unnoticed by the Petitioner leading to the impugned order.
J.Poojesh, appearing for the Petitioner challenged the order citing that the notices and orders were uploaded under the “view additional notices and orders” tab on the GST Portal, whereby the Petitioner was unaware of and unable to participate in the adjudication proceedings. The counsel further stated their willingness to pay 25% of the disputed tax while seeking one final opportunity to object to the proposals.
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Additional Government Pleader, C.Harsha Raj for the Revenue consented to the disposal of the Petition on the terms proposed by the Madras High Court.
A Single-Judge Bench of Justice Mohammed Shaffiq set aside the impugned Order while directing the Petitioner to deposit 25% of the disputed taxes within a period of four weeks from the date of the Order, inclusive of any amount that had been paid out as taxes or deposited as pre-deposit for the appeal.
The Bench further stipulated that following the fulfilment of the set conditions, the impugned assessment order shall be treated as a show-cause notice to which Petitioner shall file their objections within 8 weeks from if any which may be adjudicated by the Respondent in accordance with Law.
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