Madras HC quashes GST Order on 10% Pre-Deposit Condition Despite Taxpayer’s Non-Payment of Tax and Absence of Personal Hearing [Read Order]

The court observed that the tax demand was confirmed due to the petitioner's failure to pay the tax or attend a personal hearing following the receipt of breakdown details.
Madras HC - Madras HC quashes GST Order - GST Order - taxscan

The Madras High Court has quashed the Goods and Service Tax ( GST ) demand order on the condition of agreeing to remit 10% deposit of contested demand despite the non-payment of tax and absence in personal hearing.

The petitioner, AP Foundries Private Limited, a registered dealer under the Tamil Nadu Value Added Tax Act, 2006, availed transitional credit amounting to Rs.1,20,963.61/- in relation to purchases under the said enactment. However, the petitioner received a show cause notice questioning the eligibility of this credit.

The petitioner responded to the show cause notice on 14.02.2023, seeking a detailed breakdown of the alleged ineligible Input Tax Credit ( ITC ). Despite this, an impugned order was issued, which triggered the petitioner to challenge its validity.

Counsel for the petitioner submitted that all relevant details of purchases, including invoice numbers, dates, commodity codes, purchase values, and tax amounts, were meticulously documented. It was argued that the denial of transitional credit was solely attributed to an alleged default by the supplier, warranting a fair opportunity for the petitioner to contest the tax demand.

On instructions, learned counsel for the petitioner submitTED that the petitioner agrees to remit 10% of the tax demand as a condition for remand.

Representing the respondent, Mr. T.N.C. Kaushik, Additional Government Pleader, claimed that the requested breakdown had been provided and substantiated his argument with a screenshot from the portal.

Upon reviewing the impugned order, the court observed that the tax demand was confirmed due to the petitioner’s failure to pay the tax or attend a personal hearing following the receipt of breakdown details on 05.04.2023. Given the petitioner’s submission of relevant supply details and tax payments, it would be fair to grant an opportunity to contest the tax demand, albeit subject to conditions.

A Single bench of Justice Senthilkumar Ramamoorthy quashed the impugned order dated, subject to the petitioner remitting 10% of the disputed tax demand within two weeks from the receipt of the Court’s order.

Additionally, the petitioner was permitted to submit a comprehensive reply to the show cause notice along with all relevant documents within the stipulated period. Upon satisfaction of the remittance condition and receipt of the petitioner’s reply, the respondent was directed to afford a reasonable opportunity, including a personal hearing, and issue a fresh order within two months. Accordingly, the writ petition was disposed of. 

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