Sai Mills vs. The Assistant Commissioner Of CGST And C.Excise

Facts

The petitioner, Sai Mills, represented by its Proprietor G. Ramesh Babu, filed a writ petition challenging an order dated 03.02.2025 passed by the Assistant Commissioner of CGST and C.Excise, Madurai-I Division. The impugned order, passed under Section 74(9) of the CGST Act, 2017, was based on allegations of under-invoicing and non-accounting of the entire turnover by the petitioner and its group of companies in the sale of 'kadalai mittai' and other sweets and savories. The respondent authorities claimed to have unearthed these facts upon interception of vehicles. The petitioner denied these allegations in their reply statement. The petitioner contended that the impugned order was cryptic, non-speaking, and lacked proper explanation regarding the calculation of the quantum of demand. The respondent argued that the order contained appropriate reasons for arriving at the quantum.

Held

The Court held that while it was the petitioner's responsibility to produce necessary documents before the Assessing Authority, considering the nature of the business, the types of goods involved, and the arguments regarding the quantum, an opportunity should be granted to the petitioner. The Court found that the impugned order lacked sufficient explanation regarding the quantum of demand. Therefore, on equitable consideration, the Court decided to set aside the impugned order and remand the matter back to the respondent for fresh consideration. The petitioner was directed to deposit 25% of the disputed tax amount within four weeks. Upon deposit, the respondent authority is to consider the entire issue afresh, taking into account any additional replies and documents provided by the petitioner. The Court noted that any amount already paid could be considered while calculating the 25% deposit. The issue of whether the basis of the turnover being escaped from assessment was questionable was not definitively decided but was implicitly addressed by allowing the petitioner to present further evidence.

Key Issues

1. Whether the impugned order dated 03.02.2025, passed under Section 74(9) of the CGST Act, 2017, is cryptic, non-speaking, and lacks proper explanation regarding the quantum of demand, thereby violating principles of natural justice and statutory requirements? Petitioner's arguments: The petitioner argued that the very basis of the escaped turnover is questionable and that the impugned order fails to provide any explanation as to how the quantum of demand was arrived at. The reasons for arriving at the said quantum are not contained within the order, making it illegible and arbitrary. The petitioner also sought the supply of documents and basic worksheets used by the respondent to arrive at the demand. Respondent's arguments: The respondent contended that the impugned order contains appropriate reasons with reference to the arrival of the quantum. The respondent did not explicitly address the petitioner's request for documents and worksheets in the provided text.