Rajat Foods India Vs Assistant Commissioner (ST)
Date: September 19, 2024
Court: High Court
Bench: Madras
Type: Writ Petition
Subject Matter
GSTR-3B and GSTR-1 mismatch: Matter remanded on the condition that the taxpayer pay 10% of the disputed tax
Summary
In this case, the Madras High Court addressed a situation involving a registered taxpayer who had been consistently filing monthly GST returns and complying with tax regulations as per the Tamil Nadu Goods and Services Tax (TNGST) Act, 2017. On June 8, 2023, the taxpayer received a notice regarding a mismatch of input tax claims between GSTR-3B and GSTR-1, as per Section 73(5) of the Act. The taxpayer contended that their accountant, responsible for handling the documentation and attending hearings, was unwell and unable to attend, leading to an unawareness of the demand order issued by the tax authorities. Consequently, the matter was taken to court. The court found that the notice had been issued without the taxpayer being afforded an adequate opportunity for defense, violating principles of natural justice. Although a substantial tax liability of Rs. 5,89,004 had been imposed, the Court noted that there were sufficient materials provided by the taxpayer to challenge the alleged mismatch. The court decided to set aside the impugned order and remanded the case back to the tax authority for fresh consideration, on the condition that the taxpayer pay 10% of the disputed tax within four weeks. If this condition was not met, the previous tax order would be automatically revived. Furthermore, the taxpayer would be given an opportunity for a personal hearing after submitting their objections and supporting documents. The court also directed that the taxpayer's bank account, which had been frozen, be defreezed in light of the ruling.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
Considering the limited issue involved in this writ petition, the main writ petition itself is taken up for final hearing on consent given by either side.
2. This writ petition has been filed challenging the order passed by the 2nd respondent dated 09.11.2023 on the ground that the order was passed without affording an opportunity and in violation of principles of natural justice.
3. Heard Mr. P. Vikramkumar, learned counsel for the petitioner and Mr. G. Nanmaran, learned Special Government Pleader (Tax) for respondents.
4. The case of the petitioner is that they are registered tax payers and they have been filing monthly returns and remitting tax properly as per the TNGST Act, 2017.
5. On 08.06.2023, a notice came to be issued by the respondent alleging that there was mismatch of input tax claim under Section 73(5) of the Act.
6. The grievance of the petitioner is that they had an accountant and the entire documents were available with the accountant and since he was not doing well, he was not able to attend the hearing. The petitioner was also unaware of the issuance of the demand order. It is under these circumstances, the present writ petition was filed before this Court.
7. The learned Government Advocate (Tax) appearing on behalf of the respondent submitted that notice was issued and sufficient opportunity was given and inspite of the same, the petitioner did not avail the opportunity. Therefore, it was contended that the order does not suffer from any illegality and consequently, this writ petition is liable to be dismissed by this Court.
8. In the instant case, it is seen that notice was issued by the respondent but however, the case was handled by his accountant who did not attend the personal hearing. On going through the impugned order, it is seen that a total tax liability of Rs.5,89,004/- has been imposed against the petitioner. The petitioner has come up with a clear case that there are sufficient materials/documents to substantiate the defense of the petitioner to the effect that there was no mismatch of the input tax claim between GSTR 3B and GSTR 1.
9. This Court had an occasion to deal with a similar issue in WP.No.26477 of 2024 dated 12.09.2024. This Court wanted to afford an opportunity to the petitioner therein by putting the petitioner on terms. In order to maintain consistency, a similar order can be passed in this writ petition also. In the light of the above discussion, the impugned order passed by the respondent in Reference Number ZD331123055367M dated 09.11.2023, is hereby set aside. The matter is remanded back to the file of the respondent for fresh consideration on condition that the petitioner will pay 10% of the disputed tax amount to the respondent within a period of four weeks from today. If this condition is not complied with, the order passed by the respondent will stand automatically revived. On compliance with the said condition, the petitioner will file their reply/objection along with all the relevant documents within a period of two weeks thereafter. The respondent shall thereafter issue fresh notice to the petitioner and afford opportunity of personal hearing and pass final orders within a period of three months thereafter.
10. The bank account of the petitioner has been freezed. In the light of allowing this writ petition, there shall be a direction to the respondent to defreeze the bank account of the petitioner.
11. In the result, this writ petition is allowed with the above directions. No costs. Consequently, connected miscellaneous petitions are closed.