Magic Pearls Fine Arts vs. The Deputy State Tax Officer- 2

Facts

The petitioner, M/s. Magic Pearls Fine Arts, represented by its partner, filed a writ petition before the Madurai Bench of the Madras High Court challenging an order passed by the Deputy State Tax Officer – 2, Satthur-II Assessment Circle, Virudhungar District. The impugned order, dated 19.06.2023, pertains to the tax period 2017-18. The petitioner's GST registration was cancelled on 28.04.2023, effective from 31.03.2023, due to non-filing of returns. Consequently, the petitioner claims to have not accessed the GST common portal and therefore missed several notices, including ASMT 10, DRC 01A, DRC 01, and personal hearing notices. The petitioner sought to quash the impugned order and requested a fresh assessment with an opportunity for a personal hearing.

Held

The Court acknowledged that the petitioner might have a case on merits. While the respondent raised contentions regarding the Writ Petition being time-barred and suffering from latches, the Court exercised its discretion partly in favour of the petitioner. The impugned order dated 19.06.2023 was quashed. The Court directed the petitioner to deposit 25% of the disputed tax to the credit of the respondent from its Electronic Cash Register within 30 days. The quashed order was to be treated as an addendum to the preceding show cause notice. The petitioner was directed to file a reply within 30 days of receiving the order, along with the deposit. The respondent was then to pass a fresh order on merits and in accordance with law, preferably within two months, after providing the petitioner with a hearing. The issue of whether the Writ Petition was fundamentally time-barred was not definitively decided, but discretion was exercised to allow the petitioner an opportunity.

Key Issues

1. Whether the impugned order passed by the respondent is illegal and in violation of the principles of natural justice, warranting quashing and a fresh assessment with a personal hearing, as argued by the petitioner? 2. Whether the Writ Petition is liable to be dismissed on grounds of being hopelessly time-barred and due to the petitioner's latches, as contended by the respondent? The petitioner argued that due to the cancellation of their GST registration, they failed to notice crucial notices issued through the GST common portal and personal hearing notices. They sought an opportunity to explain their case. The respondent argued that the Writ Petition is time-barred and suffers from latches, citing the Supreme Court decisions in Assistant Commissioner (CT) LTU, Kakinada and others vs. Glaxo Smith Kline Consumer Health Care Limited and Singh Enterprises Vs. Commissioner of Central Excise, Jamshedpur and others. The respondent also contended that the appellate remedy is time-barred under Section 107 of the respective GST Enactments.