Madras HC Orders 10% Pre-deposit for Reconsideration of GST Demand Arising from Wrongful ITC Claim Amid Non-Response to SCN & Personal Hearing [Read Order]

The Madras High Court mandated 10% pre-deposit of disputed tax for the reconsideration of the Goods and Services Tax ( GST ) demand arising from the wrongful availment of Input tax Credit ( ITC ) amid non-response to the Show Cause Notice ( SCN ) and Personal hearing.

The petitioner,  Navbharat Boilers a registered person under applicable GST enactments, claims to have received neither the show cause notice nor the impugned order through any means other than the "View Additional Notices and Orders" tab on the GST portal. This lack of communication left the petitioner unaware of the proceedings.

The petitioner’s Counsel argued that the petitioner was not afforded a reasonable opportunity to contest the tax demand on merits, emphasising the absence of a personal hearing despite its reference in the impugned order. Nonetheless, the petitioner agreed to remit 10% of the disputed tax demand as a condition for remand.

Mr. T.N.C. Kaushik, Additional Government Pleader, acknowledged the petitioner's rectification petition dated 15.11.2023 and claimed that sufficient opportunity was provided before issuing the impugned order.

Reviewing the impugned order, the High Court noted that the order concerned the alleged wrongful availment of ITC, with documents including a show cause notice dated 22.06.2023. While a personal hearing notice was purportedly issued on 17.07.2023, the tax demand was confirmed due to the petitioner's failure to respond to the show cause notice or participate in the personal hearing. Considering these circumstances, the court deemed it necessary to grant the petitioner an opportunity to contest the tax demand on its merits.

Therefore, the impugned order dated 16.08.2023 was  set aside, and the matter is remanded for reconsideration by the Single bench of Justice Senthilkumar Ramamoorthy on a 10% pre-deposit of the disputed tax demand within two weeks and submitting a reply to the show cause notice within the same period.

Upon receipt of the petitioner's reply and satisfaction of the remittance condition, the court directed respondent to provide a reasonable opportunity to the petitioner, including a personal hearing, and subsequently issued a fresh order within three months. The writ petition was disposed accordingly.

To Read the full text of the Order CLICK HERE

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