The Madras HC set aside the GST (Goods and Services Tax) proposal order on the condition of a 10% pre-deposit after the petitioner was unable to participate in the personal hearing regarding the disparity between GSTR 2A and GSTR 4 returns.
The petitioner, Neelan Pharmacy and General, operates a retail trading business in medical, surgical, and pharmaceutical products. The business had availed of the composition scheme under GST. The petitioner challenged an order that was issued by the Deputy State Tax Officer, on the grounds that they were not provided a reasonable opportunity to contest the tax demand on merits.
A show cause notice was issued upon scrutiny of the return, calling upon the petitioner to explain the disparity between the purchase value as per the GSTR 2A return and the turnover reported in the petitioner’s GSTR 4/CMP-08 return. The petitioner submitted replies on 07.02.2024 and 09.02.2024. Consequently, the impugned order was issued.
S. Ramanan, representing the petitioner, submitted that the disparity is on account of not taking into consideration the closing stock and opening stock. He further submitted that the petitioner could not participate in the personal hearing because the shop was closed on account of the metro rail work being undertaken in the vicinity of the shop. The petitioner agreed to remit 10% of the disputed tax demand as a condition for remand.
Representing the respondent, T.N.C Koushik contended that due process was followed, including issuing the show cause notice and multiple reminders. The respondent pointed out that the petitioner’s reply was taken into consideration.
The court noted that the petitioner’s reply was referred to but was rejected as not acceptable. The reason for such rejection is that the petitioner did not enclose the profit and loss account and stock details for verification.
The bench of Justice Senthilkumar Ramamoorthy found that “the petitioner could not participate in the personal hearing on account of the shop being closed due to metro rail work. As a result, it appears that the petitioner was unable to produce relevant documents at the personal hearing. These documents could, however, have been enclosed with the petitioner’s reply. Therefore, it becomes necessary to put the petitioner on terms.”
The court set aside the impugned order dated April 1, 2024, and remanded the matter for reconsideration, conditional upon the petitioner remitting 10% of the disputed tax demand within two weeks from the date of receiving a copy of the order. The petitioner is allowed to submit additional documents supporting their reply within this period.
The respondent was directed to provide a reasonable opportunity for a personal hearing and issue a fresh order within three months from the date of receipt of the petitioner’s documents.
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