M/S. Sri Ganapathy Textiles vs. Deputy State Tax Officer - 2

Facts

The petitioner, M/S.Sri Ganapathy Textiles, a sole proprietorship, challenges an order-in-original (FORM GST DRC-07) dated 11.10.2023, issued by the Deputy State Tax Officer-2. The petitioner's GST registration was cancelled on 30.06.2021. Subsequently, a show cause notice dated 03.07.2023 was issued, which the petitioner claims went unnoticed as they had ceased business operations. The petitioner also states they were unaware of the impugned order passed for the tax period July 2017 to March 2018. The petitioner contends that the order was passed without proper notice, violating principles of natural justice, and seeks to quash the order and have it remanded for re-adjudication.

Held

The Court, while acknowledging the respondent's submission regarding the Supreme Court's decision, inclined to provide relief to the petitioner. The Court held that the impugned order dated 11.10.2023 would be treated as a corrigendum to the show cause notice dated 03.07.2023. The petitioner is directed to deposit 25% of the disputed tax in cash with the respondent within 30 days of receiving the order. Upon compliance, the impugned assessment order will stand quashed. The petitioner must then file a reply to the show cause notice within 30 days of receiving a copy of this order. The respondent is directed to pass final orders on merits within two weeks thereafter. The Court also clarified that if the demand is dropped, the deposited amount will be refunded. The ratio decidendi is that where there is a potential violation of natural justice due to lack of proper notice, and the petitioner is willing to comply with certain conditions (like pre-deposit), the High Court can intervene to provide an opportunity for re-adjudication.

Key Issues

1. Whether the impugned order dated 11.10.2023, passed for the tax period July 2017 to March 2018, is liable to be quashed for violation of the principles of natural justice due to lack of proper notice to the petitioner, as argued by the petitioner? 2. Whether the writ petition is maintainable in light of the Supreme Court's decision in Civil Appeal No.2413 of 2020 (Assistant Commissioner (CT), LTU, Kakinada and others Vs. M/S.Glaxo Smith Kline Consumer, Health Care Limited), as contended by the respondent? Petitioner's arguments: The petitioner argues that the impugned order was passed without providing them with adequate notice, as they had ceased business operations and were unaware of the proceedings. This failure to provide proper notice constitutes a violation of the principles of natural justice, rendering the order invalid. They seek an opportunity to represent their case afresh. Respondent's arguments: The respondent argues that the writ petition lacks merit and should be dismissed, relying on the Supreme Court's judgment in the Glaxo Smith Kline case, which likely pertains to the availability of alternative remedies or the scope of writ jurisdiction in tax matters.