Tvl. Guru Cycle Mart vs. The State Tax Officer (Intelligence)

Facts

The petitioner, Guru Cycle Mart, represented by its Proprietor Muthukrishnan, filed two writ petitions challenging orders passed by the State Tax Officer (Intelligence), Roving Squad – VI, Madurai. The impugned orders, dated 03.05.2024 and 06.05.2024, were issued for the tax periods 2020-2021 and 2021-2022 respectively. The petitioner contended that while intimation notices in DRC-01A and DRC-01 were issued, the DRC-01 did not include a show cause notice. Despite the petitioner replying to the intimation notice dated 04.09.2023, the impugned demands were confirmed without a proper show cause notice, violating principles of natural justice. The petitioner sought to quash these orders and requested a fresh assessment after providing an opportunity for a personal hearing.

Held

The Court held that the impugned orders were passed in violation of the principles of natural justice. The reasoning was based on the petitioner's submission that the DRC-01 notice did not accompany a show cause notice, and despite the petitioner's reply, the demand was confirmed without a proper opportunity for a hearing. The ratio decidendi is that statutory demands under GST law must be preceded by due process, including the issuance of a proper show cause notice and an opportunity for the assessee to be heard, in adherence to the principles of natural justice. Consequently, the Court quashed the impugned orders and directed that they be treated as an addendum to the DRC-01 notice. The petitioner was granted 30 days from the receipt of the order to file a reply. The respondent was directed to complete the proceedings within three months thereafter. No issue was expressly left undecided.

Key Issues

1. Whether the impugned orders passed by the respondent under Section 73 of the TNGST Act, 2017, are liable to be quashed for violation of the principles of natural justice? Petitioner's arguments: The petitioner argued that the impugned orders were passed in gross violation of the principles of natural justice. Specifically, they contended that although intimation notices in DRC-01A and DRC-01 were served, the DRC-01 was not accompanied by a show cause notice. Despite the petitioner submitting a reply to the intimation notice dated 04.09.2023, the respondent proceeded to confirm the demand without issuing a proper show cause notice and providing an adequate opportunity for a personal hearing. Respondent's arguments: The respondent did not record any specific arguments against the petitioner's contention regarding the violation of natural justice.