M/S. Sri Krishna Engineering Works vs. The Deputy Assistant Commissioner (St)-Ii

Held

The Court held that the demand notice dated 05.11.2024, bearing DIN No.3706112497036, was vitiated by an arithmetical error. The Court noted the petitioner's submission that a significant portion of the demanded amount had already been paid or reduced by appellate orders, and crucially, the Government Pleader conceded to the existence of an arithmetical error in the calculation of the demands. Therefore, the Court found it appropriate to set aside the impugned demand notice. The Court left it open to the first respondent (The Deputy Assistant Commissioner) to recalculate the amounts payable by the petitioner and issue a fresh demand notice. The reasoning was based on the admitted arithmetical error, which rendered the current demand unsustainable. The ratio decidendi is that a demand notice containing admitted arithmetical errors is liable to be quashed, and the revenue should be permitted to issue a corrected demand after proper recalculation. The operative direction was to set aside the demand notice and permit the issuance of a fresh one.

Facts

The petitioner, M/s. Sri Krishna Engineering Works, challenged a demand notice dated 05.11.2024, issued by the Deputy Assistant Commissioner, demanding Rs.8,68,57,840/- under IGST, CGST, and APGST Acts. The petitioner contended that they had already paid Rs.2,14,34,058/- as tax and a penalty of Rs.2,14,34,058/-, which was subsequently reduced to Rs.21,43,405.80/- by the Additional Commissioner (GST-Appeals), Guntur. The petitioner also noted that certain reliefs were granted by the High Court in a previous writ petition (W.P.No.41258 of 2022) dated 19.01.2023. The petitioner's counsel highlighted that out of the Rs.4,64,51,614/- demanded in the impugned notice, a significant portion had already been paid or reduced by appellate orders. The Government Pleader conceded that there was an arithmetical error in the demand notice.

Key Issues

1. Whether the demand notice dated 05.11.2024, bearing DIN No.3706112497036, is vitiated by an arithmetical error in calculating the tax and penalty demands against the petitioner, M/s. Sri Krishna Engineering Works? Petitioner's Arguments: The petitioner argued that the demand notice contained significant arithmetical errors in its calculation. They contended that a substantial portion of the demanded amount had already been paid or had been reduced by appellate authorities. They relied on the fact that the total demand in the notice was Rs.4,64,51,614/-, out of which a major part was already accounted for by prior payments and appellate orders. They also pointed to a previous High Court order in W.P.No.41258 of 2022 which granted certain reliefs. Respondent's Arguments: The respondent, represented by the Government Pleader, conceded that there was an arithmetical error in the addition of the various demands raised in the impugned demand notice.