The Madras High Court has extended an opportunity for contesting a Goods and Services Tax ( GST ) demand, despite the petitioner’s failure to respond to a Show Cause Notice ( SCN ) regarding a 10% pre-deposit condition. This condition was related to discrepancies found in the Input Tax Credit ( ITC ) claimed by the petitioner.
The petitioner received a notice in Form ASMT 10 dated 05.02.2023 regarding discrepancies between GSTR 3B and auto-populated GSTR 2A returns. Though a reply was made on 29.03.2023, mistakenly indicating the wrong assessment period, subsequent proceedings were overlooked, leading to the issuance of the impugned assessment order.
Due to a misconception that the proceedings had been dropped, the petitioner failed to respond to the show cause notice dated 19.09.2023 or participate in the proceedings leading to the impugned assessment order.
The counsel for the petitioner delineates two issues in the impugned order. Firstly, regarding a tax demand for IGST on supplies from a SEZ unit, arguing Rule 36(4) does not extend to such imports. Secondly, concerning the discrepancy between claimed input tax credit of CGST and SGST, asserting entitlement to Circular No. 183 and offering to remit 10% of the disputed tax demand for remand.
Mr. Prasanth Kiran, Government Advocate, highlighted the absence of a reply to the SCN or participation in proceedings. He noted the potential offer of a personal hearing, not on record.
Upon review, the court noted the petitioner’s purchase of goods from a SEZ unit, relevant invoices attached to the reply.
It was observed that “since a reply was not submitted to the show cause notice, these facts were not taken into consideration while issuing the impugned order. In these circumstances, albeit by putting the petitioner on terms, an opportunity should be provided to the petitioner to contest the tax demand.”
Consequently, a Single bench of Justice Senthilkumar Ramamoorthy ordered the quashing of the impugned order, subject to the condition of remitting 10% of the disputed tax demand within two weeks and submitting a reply to the SCN.
The Deputy State Tax Office is directed to provide a reasonable opportunity for a personal hearing and issue a fresh order within two months of receiving the petitioner’s reply. Additionally, the bank attachment notice is quashed.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
