TV Sornam Medicals Vs Commissioner of Trade Taxes (Madras High Court)

The Madras High Court held that the order is passed on the basis of non-response to notice and notice of hearing of the petitioner. Consequently, the petitioner’s order to deposit 25% of the fee in dispute and the department’s direction to grant one more opportunity are set aside.

facts- Through this application, the petitioner contested the contested order issued by 2^when respondent for the assessment year 2017-18, dated 31.12.2023. In particular, the petitioner did not respond to the notices issued to the petitioner both in RDC 01A dated 23.09.2023 and in DRC 01 dated 29.09.2023. Also, the petitioner did not take advantage of the personal hearing notice dated 09.11.2023.

It is contested that the department arrived at a difference in turnover on the basis of the information generated in GSTR-2A without realizing that the petitioner did not avail input tax credit after the petitioner opted for payment of u/e tax. 10 of the respective GST act. Apart from this, it is submitted that with effect from October 2017, the petitioner has ceased to be eligible for input tax credit and therefore, the petitioner has been visited with an unfair claim.

Conclusion- Held that the petitioner may be given an opportunity to state his grievance before the respondents in terms. Therefore, the petitioner shall file the impugned fee of 25% confirmed by the impugned order in the Electronic Cash Ledger within thirty (30) days from the date of receipt of the copy of this order. The contested order, dated 31.12.2023, pronounced by 2^when the respondent is quashed and the case is remanded to 2^when the respondent to issue a new order on the merits. The impugned order being set aside will be treated as an Addendum to the Show Cause Notice in DRC 01A dated 23.09.2023 and in DRC 01 dated 29.09.2023.

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

Through this application, the petitioner challenged the contested order issued by 2^when respondent for the assessment year 2017-18, dated 31.12.2023.

2. The petitioner did not respond to the notices issued to the petitioner both in RDC 01A dated 23.09.2023 and in RDC 01 dated 29.09.2023. Also, the petitioner did not take advantage of the personal hearing notice dated 09.11.2023.

3. Learned counsel for the petitioner would submit that the petitioner also did not respond to the notice. It is clear that the impugned order was passed without giving 3 opportunities as provided under section 75(5) of the said GST act. Apart from this, the learned counsel for the petitioner submitted that the petitioner filed regular returns till the month of November 2017. Thereafter, the petitioner opted for composite scheme under Section 10 of the said GST legislation.

4. It is submitted that the department arrived at a difference in turnover on the basis of the information generated in GSTR-2A without realizing that the petitioner did not get input tax credit after the petitioner opted to pay tax under section 10 of the respective Implementation of GST. Apart from this, it is submitted that with effect from October 2017, the petitioner has ceased to be eligible for input tax credit and therefore, the petitioner has been visited with an unfair claim. He therefore prayed for an opportunity to explain the case again. It is submitted that the petitioner would in all probability succeed if given an opportunity. Learned counsel for the petitioner submits that the petitioner can be subjected to any reasonable period to secure the interest of the income.

5. Learned Government Counsel for the respondent opposes the above submission on the ground that the writ petition is hopelessly time-barred and therefore liable to be dismissed as barred in light of the decision of the Hon. ble Supreme Court in the case Assistant Consumer Health Care Limited reported in 2020 SCC Online SC 440.

6. It is submitted that the appeal is also barred by limitation under Section 107 of the respective GST Acts as held by the 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 writ petition is liable to be dismissed.

7. In view of the arguments raised by the learned counsel for the petitioner and the learned additional pleader for the respondents, the petitioner may be given an opportunity to state his grievance before the respondents in terms. Therefore, the petitioner shall file the impugned fee of 25% confirmed by the impugned order in the Electronic Cash Ledger within thirty (30) days from the date of receipt of the copy of this order. The contested order, dated 31.12.2023, pronounced by 2^when the respondent is quashed and the case is remanded to 2^when the respondent to issue a new order on the merits. The impugned order being set aside will be treated as an addendum to the Show Cause Notice in DRC 01A dated 23.09.2023 and in DRC 01 dated 29.09.2023.

8. The petitioner shall file a consolidated response within 30 days from the date of receipt of the copy of this order. The defendant will subsequently proceed to adopt a definitive decision on the merits and under the law, in the shortest possible time, preferably within two (2) months from the date of the response to be submitted by the petitioner. It is stated that if the petitioner does not file any reply nor deposit the amount as directed above, the respondents are at liberty to proceed against the petitioner as if this writ petition had been dismissed today. in limine. It is needless to state that the petitioner will be heard before passing the final order.

9. In view of the above terms, this writ petition is allowed. No cost. Accordingly, the connected Miscellaneous Petition is closed.