The Madras HC ordered deposit of 25% of the disputed tax while providing one more opportunity to be heard

Sornam Medicals Television vs Commissioner of Commercial Taxes (Madras High Court)

The Madras High Court held that the order was passed on the basis of failure to respond to notice and interrogation of the petitioner. Accordingly, the order was vacated and directed the petitioner to deposit 25% of the disputed tax and directed the department to grant one more option.

Facts- In this letter, the complainant questions the contested decision issued by the Court of Second Instance^II respondent for the assessment year 2017-18 dated 31/12/2023. Specifically, the petitioner has failed to respond to the notices issued to him both in DRC 01A dated 23 September 2023 and in DRC 01 dated 29 September 2023. The petitioner he also did not take advantage of the notice of an in-person hearing dated November 9, 2023.

It was disputed that the department had arrived at the difference in turnover based on the information generated in GSTR-2A without realizing that the petitioner was not availing input tax credit after he had opted to pay tax u/s. 10 of the relevant GST Act. It is further alleged that from October 2017, the petitioner also stopped enjoying the input tax credit and was therefore made an unjustified demand.

Application- It held that the petitioner may be given an opportunity to present his complaint before the respondents on terms and conditions. Accordingly, petitioner will deposit 25% of the disputed tax evidenced by the impugned order from the Electronic Cash Book within thirty (30) days from the date of receipt of the copy of the order. The contested decision of December 31, 2023 issued by the 2nd^II annuls the claim and remits the case for reconsideration II^II the defendant to issue a new decision on the merits of the case. The impugned order, which has been set aside, must be treated as an addition to the show cause notice in DRC 01A dated 23/09/2023 and DRC 01 dated 29/09/2023.

FULL TEXT OF THE JUDGMENT/ORDER OF THE HIGH COURT OF MADRAS

In this letter, the complainant questions the contested decision issued by the Court of Second Instance^II respondent for the assessment year 2017-18 dated 31/12/2023.

2. The petitioner has failed to respond to the notices issued to him in both DRC 01A dated September 23, 2023 and DRC 01 dated September 29, 2023. The petitioner has also failed to take advantage of the notice of in-person hearing dated November 9, 2023 .

3. The petitioner’s lawyer submits that the petitioner also failed to respond to the summons. It is obvious that the challenged order was issued without providing the 3 options referred to in Art. 75 section 5 of the relevant GST Act. Further, the learned counsel for the petitioner submitted that he had been filing regular returns till November 2017. Thereafter, the petitioner opted for the scheme filed under Section 10 of the relevant GST Act.

4. It is submitted that the department has arrived at the difference in turnover based on the information generated in GSTR-2A without realizing that the petitioner was not availing input tax credit after the petitioner had opted to pay tax under section 10 of the relevant regulation, GST Act. It is further alleged that from October 2017, the petitioner also stopped enjoying the input tax credit and was therefore made an unjustified demand. So he prayed for one chance to clarify the matter again. It is submitted that the petitioner would most likely have been successful if given the opportunity. Learned counsel for the petitioner submits that any reasonable period may be granted to the petitioner to safeguard the interests of the income.

5. The above submission is opposed by the learned Government Advocate for the respondent on the ground that the writ petition is hopelessly barred and is therefore liable to be dismissed on the ground of blockages in the light of the decision of the Hon’ Supreme Court in the case Assistant Consumer Health Care Limited reported in 2020 SCC Online SC 440.

6. It is submitted that the remedy is also barred in terms of limitation under Art. 107 of the relevant provisions on tax on goods and services, as stated by the Hon’ble Supreme Court in the case Singh Enterprises Vs. Commissioner of Central Excise, Jamshedpur and others reported in (2008) 3 SCC 70 and submitted that this suit should be dismissed.

7. After considering the arguments advanced by the learned counsel for the petitioner and the learned Additional Government Pleader on behalf of the respondents, the petitioner may be afforded an opportunity to present his complaint before the respondents on terms and conditions. Accordingly, petitioner will deposit 25% of the disputed tax evidenced by the impugned order from the Electronic Cash Book within thirty (30) days from the date of receipt of the copy of the order. The contested decision of December 31, 2023 issued by the 2nd^II annuls the claim and remits the case for reconsideration II^II the defendant to issue a new decision on the merits of the case. The impugned order, which has been set aside, must be treated as an addition to the show cause notice in DRC 01A dated 23/09/2023 and DRC 01 dated 29/09/2023.

8. The applicant shall submit a summary response within 30 days from the date of receipt of a copy of this order. The respondent will then proceed to enter a final order on the merits and in accordance with law as expeditiously as possible, preferably within two (2) months from the date of the petitioner’s response. It is clarified that in case the petitioner fails to file an answer or deposit the amount as directed above, the respondents are at liberty to initiate proceedings against the petitioner as if the suit had been dismissed today in limin. Needless to say, the applicant will be heard before a final order is made.

9. In view of the above, this Writ Petition is admissible. No costs. Accordingly, the related miscellaneous petition is closed.