Unaware of GST Proceedings on ITC Availment as Registration already cancelled: Madras HC sets aside and remands matter on 10% Pre-deposit [Read Order]

The Madras High Court sets aside the order and remanded the matter with regards to the wrong availment of GST- ITC ( Input Tax Credit ) on a pre-deposit of 10% of disputed tax demand.

The petitioner, Ziss Enterprises Pvt. Ltd a trader in leather goods stated that its GST (Goods and Services Tax) registration was cancelled on 14.10.2020. Therefore they were not aware about the proceedings culminating in the impugned order. Thus, filed writ petition to set aside the order before the High Court.

The petitioner’s counsel submitted that the confirmed tax proposal came from inadvertent errors in their GSTR 3B returns. Specifically, amounts intended for 'all other ITC' were erroneously recorded under the reverse charge mechanism ( RCM ) column. The petitioner agreed to remit 10% of the disputed tax demand for each assessment period as a condition for remand.

Government Advocate Mr. V. Prasanth Kiran defended the proceedings, asserting that principles of natural justice were upheld through a show cause notice issued on 11th September 2023 and a subsequent personal hearing on 14th September 2023.

The bench of Justice Senthilkumar Ramamoorthy acknowledged the procedural lapse wherein the tax proposal was confirmed in the petitioner's absence during the proceedings. Consequently, the court deemed it necessary to afford the petitioner an opportunity to contest the tax demand on merits, albeit under specific conditions.

As a result, the Madras High Court set aside the orders dated 31st October 2023, subject to the petitioner remitting 10% of the disputed tax demand within two weeks of receiving the court's order. The petitioner was also granted permission to submit a reply to the show cause notice within this period. Upon receipt of the remittance and the reply, the respondents were directed to conduct a fresh assessment and issue orders within three months.

The writ petition was disposed of accordingly. Mr.K.M.Malarmannan appeared for the petitioner.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates