K Anantharaj vs. The Deputy State Tax Officer - 2
Original PDF →Facts
The petitioner, K. Anantharaj, a works contractor, filed a writ petition challenging an order dated 25.07.2023 passed by the Deputy State Tax Officer-2, Sattur. The impugned order pertains to the financial year 2020-21. The petitioner contended that his registration was cancelled on 24.03.2021 with effect from 01.02.2021, making him unaware of the notices issued for adjudication proceedings, including DRC 01 dated 17.03.2023, and the personal hearings scheduled for 04.04.2023 and 14.07.2023. He claimed to have only become aware of the arrears of tax after the respondent informed him about the impugned order. The petitioner argued that the taxable turnover was re-determined due to a difference between GSTR 01 and GSTR 07 of the employer and sought an opportunity for a fresh assessment with a personal hearing.
Held
The Court held that the petitioner may have a case on merits and exercised discretion in his favour. The impugned order dated 25.07.2023 was quashed. The case was remitted back to the respondent to pass a fresh order on merits. This decision was made subject to the petitioner depositing 25% of the disputed tax to the credit of the first respondent from his Electronic Cash Register within 30 days of receiving the order. The Court directed that the quashed order would be treated as an addendum to the show cause notices. The petitioner is expected to file a reply within 30 days of receiving a copy of the order, along with the deposit. The respondent is to pass a fresh order expeditiously, preferably within two months thereafter, after providing the petitioner with a personal hearing. The Court found merit in the petitioner's plea regarding lack of opportunity, despite the respondent's arguments on limitation and laches. The ratio decidendi is that where a taxpayer demonstrates a potential case on merits and a plausible reason for non-participation in proceedings (like registration cancellation), and is willing to comply with reasonable conditions, a High Court may, in its writ jurisdiction, grant an opportunity for a fresh adjudication to ensure natural justice is served, even if appellate remedies are time-barred.
Key Issues
1. Whether the impugned order dated 25.07.2023, passed for the financial year 2020-21, is liable to be quashed on grounds of gross violation of natural justice, specifically the failure to provide the petitioner with an opportunity of a personal hearing, as per the provisions of the GST Act, 2017? Petitioner's arguments: The petitioner argued that due to the cancellation of his GST registration, he was unaware of the notices issued for adjudication and personal hearings, and consequently, the impugned order was passed in violation of natural justice. He contended that he has a fair case on merits and should be given one opportunity to explain his position, even if on reasonable terms. Respondent's arguments: The respondent argued that the writ petition is hopelessly time-barred and suffers from latches, citing the Supreme Court's decision in Assistant Commissioner (CT) LTU, Kakinada and others vs. Glaxo Smith Kline Consumer Health Care Limited. The respondent also contended that the appellate remedy is time-barred under Section 107 of the respective GST Enactments, as per the Supreme Court's ruling in Singh Enterprises Vs. Commissioner of Central Excise, Jamshedpur and others, and therefore, the writ petition should be dismissed.
Sections Cited
Section 107
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Before: and
Heard the learned counsel for the petitioner and learned Government Advocate for the respondent.
The petitioner is before this Court against the impugned order dated 25.07.2023 passed by the respondent for the period from April 2020 to March 2021. 3. The petitioner has failed to participate in the adjudication proceedings pursuant to the notice issued to the petitioner in DRC 01 dated 17.03.2023. The petitioner has also failed to appear before the respondent despite the notices fixed the personal hearings on 04.04.2023 and 14.07.2023 being issued to the petitioner through SMS and E-Mail.
The learned counsel for the petitioner submits that the petitioner has a fair case to succeed. As the taxable turn over has been re-determined on account of the difference between the amounts in GSTR 01 and GSTR 07 of the employer. 2/6 https://www.mhc.tn.gov.in/judis
It is further submitted that the petitioner's registration was cancelled on 24.03.2021 with effect from 01.02.2021 and thus, the petitioner was unaware of the notices that preceded the impugned order.
It is submitted that for the same reason, the petitioner was also unaware of the impugned order being passed on 25.07.2023. 7. The learned counsel for the petitioner submits that only after the respondent informed that the petitioner was in arrears of tax for a period of 2020-21 in terms of the impugned order, the petitioner downloaded information from the website which is produced before this Court.
It is submitted that the Court may put to any reasonable terms so that the petitioner can explain the case. It is submitted that the in all likewise, the petitioner should succeed if the petitioner is given one opportunity to explain.
The above submission is opposed by the learned Government Advocate for the respondent, on the ground that the Writ Petition is hopelessly time barred 3/6 https://www.mhc.tn.gov.in/judis and therefore, liable to be dismissed, on account of latches, 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. 10. It is submitted that the appellate remedy is also time barred in terms of limitation under Section 107 of the respective GST Enactments as held by the Hon'ble Supreme Court in the case of 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.
Having considered the arguments advanced by the learned counsel for the petitioner, the learned Government Advocate for the respondent, this Court is of the view that the petitioner may have a case on merits and therefore, discretion is exercised partly in favour of the petitioner by quashing the impugned order and remitting the case back to the respondent to pass a fresh order on merits, subject to the petitioner depositing 25% of disputed tax to the credit of the first respondent from its Electronic Cash Register within a period of 30 days from the 4/6 https://www.mhc.tn.gov.in/judis date of receipt of this order.
The impugned order, which stands quashed, shall be treated as addendum to the show cause notices that preceded the impugned order.
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, together with above deposit. The respondent shall pass a fresh order on merits and in accordance with law as expeditiously as possible preferably within a period of two months thereafter. Needless to state, the petitioner shall be heard before passing the order. This Writ Petition is disposed of, with above direction. No costs. Consequently connected miscellaneous petitions are closed. Index : Yes / No 01.08.2024 Internet : Yes / No apd To The Deputy State Tax Officer-2, Sattur 1 Assessment Circle, Virudhungar. 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.