Hajee S M Ahamed and Company Vs Deputy State Tax Officer
Date: July 16, 2024
Subject Matter
₹1.36 Crore Penalty for Tax demand of ₹25000: Matter remanded for fresh consideration
Summary
The petitioner filed a writ petition challenging a GST order issued on January 19, 2024, based on claims of improper communication regarding tax liabilities. The petitioner was unaware of the proceedings and only became aware of the resolution and recovery actions upon receiving a letter dated May 27, 2024. The main issues raised by the petitioner included: - The tax demand being relatively small (approx. Rs. 25,000) while an excessive penalty of approximately Rs. 1.36 crore was imposed for non-generation of e-way bills. - The petitioner had substantial e-way bills generated, totaling Rs. 6,81,55,597, contrary to the assertion that indicated nil value. In the counter, the learned Government Advocate stated that the principles of natural justice were followed, referencing notifications and reminders allegedly sent to the petitioner. Upon review, the court noted the substantial penalty was based on claims of nil value e-way bills and allowed for a remand of the case. The court set aside the previous order and directed a re-examination of the petitioner’s submissions concerning the show cause notice. The petitioner was granted the opportunity to respond with relevant documents and was assured of a personal hearing. The court further lifted any bank attachments related to this issue. Ultimately, the petition was disposed of without costs, and connected miscellaneous petitions were closed.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
An order in original dated 19.01.2024 is the subject of challenge in this writ petition. The petitioner asserts that he was unaware of proceedings culminating in the impugned order because the show cause notice and other communications were uploaded on the GST portal but not communicated to the petitioner through any other mode. It is further stated that the petitioner came to know of the impugned order only on 27.05.2024 upon receipt of a recovery letter from the 2nd respondent.
2. Learned counsel for the petitioner submits that the total tax demand under the impugned order is only about Rs.25,000/-, whereas penalty of about Rs.1.36 crore was imposed for alleged non generation of e-way bills. By referring to an abstract indicating the total value of e-way bill generation, learned counsel submits that e-way bills for a total value of Rs.6,81,55,597/-were generated. He also points out that a sum of Rs.1,55,300/- was debited from the petitioner’s bank account and that this amount not only covers the total tax demand but a portion of the penalty. He seeks another opportunity in these facts and circumstances.
3. Mr. K. Vasanthamala, learned Government Advocate, accepts notice for respondents 1 & 2. She submits that principles of natural justice were complied with by issuing intimation dated 24.05.2023, show cause notice dated 27.06.2023 and by issuing two reminders.
4. On examining the impugned order, it is evident that substantial penalty was imposed on the basis that the petitioner had generated e-way bills indicating nil value. The petitioner has placed on record details of e- way bills, as downloaded from the GST portal, and also prepared an abstract based on the data derived therefrom. Such abstract indicates that e-way bills were generated for the aggregate value of Rs.6,81,55,597/- during the relevant period. These facts and circumstances justify a remand especially in view of the petitioner’s account being debited to an extent of Rs.1,55,300/- on 19.06.2024.
5. For reasons aforesaid, the order dated 19.01.2024 is set aside and the matter is remanded for reconsideration. The petitioner is permitted to submit a reply to the show cause notice by annexing all relevant documents. Such reply shall be submitted within 15 days from the date of receipt of a copy of this order. Upon receipt thereof, the 1st respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within a period of three months from the date of receipt of the petitioner’s reply. In view of the assessment order being set aside, the bank attachment is raised.
6. The writ petition is disposed of on the above terms without any order as to costs. Consequently, connected miscellaneous petitions are closed.