M/S Cognax Automation Private LTD vs. The State Tax Officer (Main)
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The petitioner, M/s.Cognax Automation Private Ltd., filed a writ petition challenging an order dated 28.07.2022, passed by the State Tax Officer (Main), Tuticorin-II. This order confirmed a demand against the petitioner, including SGST and CGST tax, interest, and penalty. The total confirmed demand amounted to Rs. 4,86,911.70 for SGST and CGST at 9% tax rate, and Rs. 2811.60 and Rs. 2481.60 for SGST and CGST at 0% tax rate, respectively. The petitioner claimed they were unaware of the notices preceding the impugned order, only becoming aware after their bank account was attached on 13.02.2024 and funds were recovered on 06.03.2024 and 19.03.2024. They sought an opportunity to explain their case.
Held
The Court decided to grant partial relief to the petitioner. While acknowledging the respondent's arguments regarding latches and the expiry of the limitation period for filing a statutory appeal, the Court considered the fact that amounts were recovered from the petitioner's bank account after attachment. The Court found it appropriate to exercise its discretion in favour of the petitioner. Consequently, the impugned order dated 28.07.2022 was quashed. The Court directed that the quashed order be treated as an addendum to the show cause notices. The case was remitted back to the respondent to pass fresh orders on merits and in accordance with law. The petitioner was directed to file a reply within 30 days of receiving the order, and the respondent was to pass fresh orders expeditiously, preferably within three months, after hearing the petitioner. The Court explicitly stated that the petitioner shall be heard before passing the fresh order. The writ petition was allowed with these directions.
Key Issues
1. Whether the impugned order dated 28.07.2022, passed by the respondent, is liable to be quashed for being without jurisdiction and in violation of statutory provisions, particularly concerning the petitioner's alleged lack of awareness of prior notices? Petitioner's contention: The petitioner, a small operator, was unaware of the notices posted on the GST common portal and only learned of the demand after their bank account was attached and funds were recovered. They argued for an opportunity to present their case. Respondent's contention: The respondent argued that the writ petition was devoid of merits and liable to be dismissed due to latches, as the impugned order was issued on 28.07.2022. They further contended that there was no scope for interest in light of the Supreme Court decision in Assistant Commissioner (CT) LTU, Kakinada vs. Glaxo Smith Kline Consumer Health Care Limited, and no scope for permitting a statutory appeal due to expired limitation, citing Singh Enterprises vs. Commissioner of Central Excise, Jamshedpur.
Sections Cited
Section 107
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Cause title — parties, addresses and appearances
ORDER Heard learned counsel for the petitioner and learned Additional 1/6 https://www.mhc.tn.gov.in/judis Government Pleader for the respondent.
The petitioner is aggrieved by the impugned order bearing reference No.ZD330722012576L passed on 28.07.2022 in Form GST DRC 07. 3. By the impugned order, the respondent has confirmed the amount proposed to be demanded from the petitioner in the notice that preceded the aforesaid order.
The amounts that have been confirmed against the petitioner vide impugned order are as under: (Amount in Rs.) S.No Tax rate (%) Act Tax/Cess Interest Penalty Fee Others Total 1. 9 SGST 442,647.00 0.00 44,264.70 0.00 0.00 4,86,911.70 2. 9 CGST 442,647.00 0.00 44,264.70 0.00 0.00 4,86,911.70 3. 0 SGST 2,556.00 0.00 255.60 0.00 0.00 2811.60 4. 0 CGST 2,256.00 0.00 225.60 0.00 0.00 2481.60
The learned counsel for the petitioner submits that the petitioner is a small time operator and was unaware of the notices that preceded the impugned 2/6 https://www.mhc.tn.gov.in/judis order.
It is submitted that the petitioner became aware of the impugned order and the notices, which were posted in the GST common portal, only after the Bank account was attached on 13.02.2024 and the amounts of Rs.1,03,156/- and Rs.3,321/- were recovered on 06.03.2024 and 19.03.2024, respectively.
It is submitted that since the petitioner has a fair case, the petitioner may be given one opportunity to explain the case.
The learned Additional Government Pleader for the respondent, on the other hand, submits that this Writ Petition is devoid of merits and liable to be dismissed, on account of latches, as the impugned order is issued on 28.07.2022. 9. It is further submitted that there is no scope of interest in the light of the decision of the Hon'ble Supreme Court in the case of Assistant Commissioner (CT) LTU, Kakinada and others vs. Glaxo Smith Kline Consumer Health Care Limited reported in 2020 SCC Online SC 440. 3/6 https://www.mhc.tn.gov.in/judis
It is further submitted that there is no scope for permitting the petitioner to file statutory appeal as the limitation has expired under Section 107 of the respective GST enactments in the light of decision of the Hon'ble Supreme Court 4/6 https://www.mhc.tn.gov.in/judis
It is expected that the petitioner shall file a reply within a period of 30 days from the date of receipt of a copy of this order. The respondent shall, thereafter, pass fresh orders on merits and in accordance with law as expeditiously as possible preferably within a period of three months. Needless to state, the petitioner shall be heard, before passing the order. This Writ Petition is allowed, with above direction. No costs. Consequently connected miscellaneous petitions are closed. Index : Yes / No 28.06.2024 Internet : Yes / No apd To The State Tax Officer (Main), Tuticorin-II, Tuticorin. 5/6 https://www.mhc.tn.gov.in/judis C.SARAVANAN, J.
apd
2024 6/6 https://www.mhc.tn.gov.in/judis
Reproduced from the public record of the Madras High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.