In a recent ruling, the Madras High Court observed that there is no excuse for the ignorance of Show Cause Notice ( SCN ) as uploaded on the “View Additional Notices and Orders” tab on GST Portal.
The bench noted that “The justification of the petitioner for not responding to the show cause notice is not convincing in as much as the petitioner is under an obligation to monitor the GST portal on an ongoing basis as a registered person.”
Following an inspection of the petitioner’s registered business premises in March 2023, proceedings commenced with the issuance of an intimation, followed by a show cause notice dated 28.09.2023. The petitioner could not respond to the show cause notice, as it was only uploaded on the “View Additional Notices and Orders” tab on the GST portal and not communicated through any other means.
The petitioner’s counsel argued that the tax liability was incorrectly determined based on the wrong balance sheet year, resulting in an erroneous taxable turnover calculation. Additionally, they highlighted other aspects of the tax proposal where they alleged a complete lack of application of mind by the authorities.
Mr. V. Prashanth Kiran, representing the government, contended that the petitioner admitted liability and settled dues for some issues specified in the intimation, indicating awareness of the proceedings. However, the petitioner chose not to respond to the subsequent show cause notice.
The court observed that the petitioner provided balance sheets for the financial years ending 31.03.2018 and 31.03.2019, revealing amounts payable to sundry creditors. As of 31.03.2018, the sum stood at Rs. 2,65,31,910/-, while for the fiscal year ending 31.03.2019, it amounted to Rs. 8,95,91,806/-. However, it remained unclear whether these balance sheets were presented to the respondent.
Despite this uncertainty, while undertaking adjudication for assessment period 2017-2018, it was incumbent on the respondent to call for and examine the financial statement for the year ended 31.03.2018 and not use the financial statement for year ended 31.03.2019 as the basis. To that extent, the court called the order for interference.
As the petitioner’s justification for not responding to the show cause notice is not convincing, the court noted that it is necessary to put the petitioner on terms.
As the petitioner agreed to remit a sum of Rs.10,00,000/- as a condition for remand, a Single bench of Justice Senthilkumar Ramamoorthy sets aside the impugned order. It was directed to remit the amount within a period of three weeks from the date of receipt of a copy of the order.
The petitioner was granted permission to respond to the show cause notice within the specified timeframe. Upon receiving the petitioner’s reply and confirming receipt of the agreed sum, the respondent was instructed to afford the petitioner a fair opportunity, including a personal hearing. Subsequently, the respondent was directed to issue a fresh order within three months from the date of receiving the petitioner’s reply.
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