Case Alert from H.C. of Madras: Petitioner to be provided an opportunity to contest tax demand on merits

The Hon’ble High Court of Madras directed that Petitioner was to be provided an opportunity to contest tax demand on merits and therefore, impugned order was to be set aside and matter was to be remanded for reconsideration

In the case of Tvl. Rana Granites v. Assistant Commissioner (ST) Senthil Kumar Ramamoorthy,

J. W.P. No. 12980 of 2024 W.M.P. NOS. 14139 & 14141 of 2024, (June 10, 2024)

In the present case, an order is challenged on the ground that petitioner was not provided a reasonable opportunity to contest the tax demand on merits. Petitioner was unaware of proceedings culminating in impugned order dated 05.12.2023 as notice and impugned order were uploaded in “View Additional Notices and Orders” tab on GST portal and not communicated to petitioner through any other mode and the petitioner became aware of the issue only in march 2024 when garnishee proceedings were initiated against them. On examining the impugned order. Learned council of the petitioner submits that the confirmed tax proposal pertained to mismatch between GSTR-3B returns and auto populated GSTR-2A. If provided an opportunity, he submits that the petitioner would be in a position to establish that only eligible ITC was availed of and on instruction learned council of the petitioner submits that the petitioner agrees to remit 10% of the disputed tax demand as condition for remand and such tax proposal was confirmed because petitioner did not reply to show cause notice.

Held that impugned order dated 05.12.2023 is set aside and matter is remanded for reconsideration subject to the condition that the petitioner remits 10% of the disputed tax demand as agreed to within two weeks form the date of receipt of copy of this order. Within the aforesaid period petitioner is permitted to send a detailed reply to the show cause notice by enclosing all the relevant documents. Upon receipt thereof and upon being satisfied that 10% of the disputed tax demand was received, the respondent is directed to provide a reasonable opportunity, including a personal hearing, and thereafter issue a fresh order within three months from the date of receipt of the petitioner's reply. In view of the assessment order being set aside, the garnishee order is also set aside.

Therefore, petitioner to be provided an opportunity to contest tax demand on merits, albeit by putting petitioner on terms. Impugned order was to be set aside and matter was to be remanded for reconsideration.