M. Sumitha Vs Deputy State Tax Officer-2
Date: July 1, 2024
Subject Matter
GSTR7 and 3B mismatch: Reconsideration ordered as the taxpayer is unaware of the regulations
Summary
In the case M. Sumitha Vs Deputy State Tax Officer-2, the Madras High Court examined the procedural fairness in GST assessment proceedings following a petition challenging an assessment order dated November 15, 2023. The petitioner argued that the assessment process was flawed due to a lack of opportunity to contest tax demands, primarily because their accountant, who managed their GST compliance, had departed. This departure left the petitioner, who was not well-versed in GST regulations, unaware of the important proceedings concerning their GSTR returns. - The tax demand was triggered by discrepancies between the petitioner’s GSTR filings and TDS figures from the deductor’s GSTR 7. The court noted that despite the authorities issuing notifications and show cause notices, the petitioner could not attend the hearings due to reliance on their accountant. Recognizing the importance of natural justice, the court ruled in favor of the petitioner, acknowledging their ignorance and inability to manage the proceedings following the accountant’s exit. The court subsequently set aside the original assessment order but required the petitioner to remit 10% of the disputed tax demand within fifteen days and submit a response to the show cause notice.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
An assessment order dated 15.11.2023 is assailed on the ground that the petitioner did not have a reasonable opportunity to contest the tax demand on merits. By asserting that the petitioner is not conversant with GST compliances and had entrusted the same to an accountant, who left the employment of the petitioner, the present writ petition was filed.
2. Learned counsel for the petitioner submits that the petitioner was unable to participate in proceedings because she was handicapped after the accountant left. He also submits that the tax proposal arose out of an inadvertent error committed while filing the GST returns, and that the petitioner would be in a position to explain the mismatch if provided an opportunity. On instructions, learned counsel for the petitioner submits that the petitioner agrees to remit 10% of the disputed tax demand as a condition for remand.
3. Mr. V. Prasanth Kiran, learned Government Advocate, accepts notice for the respondents. He submits that principles of natural justice were complied with by issuing intimation dated 22.07.2022, show cause notice dated 23.01.2023 and by issuing multiple personal hearing notices.
4. On examining the impugned order, it is evident that the tax proposal pertains to a TDS mismatch between the GSTR 7 return filed by the tax deductor and the GSTR 3B and the GSTR 1 returns of the petitioner. It is also clear that such proposal was confirmed on account of the petitioner not replying to the show cause notice or appearing in person for the hearing. By taking into account the assertion that non participation was on account of the petitioner’s ignorance of such proceedings, the interest of justice warrants reconsideration by putting the petitioner on terms.
5. For reasons set out above, impugned order dated 15.11.2023 is set aside on condition that the petitioner remits 10% of the disputed tax demand within fifteen days from the date of receipt of a copy of this order. The petitioner is also permitted to submit a reply to the show cause notice within the aforesaid period. Upon receipt of the petitioner’s reply and on being satisfied that 10% of the disputed tax demand was received, the first respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within three months from the date of receipt of the petitioner’s reply.
6. W.P.No.16128 of 2024 is disposed of on the above terms. No costs. Consequently, W.M.P.Nos.17668 and 17670 of 2024 are closed.