G Sadayaramanujam vs. The State Tax Officer (St)
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The petitioner, G. Sadayaramanujam, filed two writ petitions challenging show cause notices issued by the State Tax Officer (R1) dated 28.12.2023. These notices pertained to the tax periods 2017-18 and 2018-19, and were issued for non-filing of GST returns. This is the second round of litigation, as the petitioner had previously filed a writ petition (W.P.(MD)No.22874 of 2021) seeking directions to accept tax dues without penalty. That petition was disposed of, and a subsequent miscellaneous petition to recall the order was allowed on 21.03.2022. The court noted a long-standing dispute between the petitioner and the legal heirs of his deceased brother, G. Gurusamy, concerning the operation and registration of GGN Spinning Mill (P) Ltd. (R2). The company's name was struck off from the Register of Companies in 2018.
Held
The Court held that there was no merit in the writ petitions. It observed that the petitioner must await the orders to be passed by the respondent tax officer. If any adverse orders are passed, the petitioner has the liberty to work out his remedy in the manner known to law. The Court did not delve into the merits of the show cause notices themselves, nor did it quash them. The ratio decidendi is that High Courts should not interfere at the show cause notice stage when statutory remedies are available, especially in cases involving ongoing disputes that require adjudication by the relevant authorities or tribunals. The Court dismissed the writ petitions, leaving the petitioner to pursue his remedies after the final order is passed by the respondent.
Key Issues
1. Whether the show cause notices issued by the State Tax Officer for the periods 2017-18 and 2018-19, proposing to levy penalty for non-filing of GST returns, are valid and ought to be quashed, considering the ongoing disputes regarding the company's registration and operation. Petitioner's arguments: The petitioner likely argued that the notices are premature or invalid due to the complex inter-party disputes and the company's de-registration, which might affect his liability. He may have sought to have the matter resolved in the National Company Law Tribunal (NCLT) where the dispute is pending. Revenue's arguments: The revenue contended that tax is payable for supplies effected from Unit B, which is under the petitioner's control, and that the private respondents (legal heirs of the deceased brother) cannot prevent the petitioner from carrying on business or paying tax. The revenue likely argued that the non-filing of returns necessitates the issuance of show cause notices for penalty, irrespective of the inter-party disputes.
Sections Cited
Section 74
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Before: and
Heard together (2 matters)
Read from the judgment's own cause title. This page is filed under one of them.
By this common order, both the Writ Petitions are taken up for dismissal.
The petitioner has challenged the impugned notice dated 28.12.2023 in DRC 01 dated 28.12.2023 together with DRC 01A for the assessment years 2017-18 and 2018-19. 3. This is the second round of litigation before this Court. Earlier, the petitioner had filed W.P(MD)No.22874 of 2021 for the following relief: “Directing the 1st respondent to receive the tax due of Rs.6,45,414/- (till Nov-21) and Rs.2,81,000/- (up to date for December 2021 approximately) in respect of GSTIN No. 33AAACG6670M1ZE without penalty by providing an user ID and password temporarily so that the petitioner can file GST-R1 and GST-R3B returns regularly along with his future taxes within a time to be stipulated by this Court based on the communication dated 15.12.2021 by the 1st respondent.” 3/9 https://www.mhc.tn.gov.in/judis
W.P.(MD) Nos.7411 & 6623 of 2024
The said Writ Petition was filed both against the Department and the private respondents/respondents 3 to 5 herein, who are the legal representatives of his deceased brother namely, Gurusamy. The Writ Petition was disposed of, against which, the petitioner had also filed W.M.P.(MD)No.3423 of 2022 for the following relief: “To Recall the order dated 09.02.2022 in WP.No.22874/2021 and reopen the Writ Petition and pass such further or other orders as this Hon'ble Court may deem fit.”
After discussion, W.M.P.(MD)No.3423 of 2024 was allowed on 21.03.2022 with the following observation:
“2. Earlier, by an interim order, dated 25.06.2003, the then Company Law Board in a proceedings initiated by the petitioner against the second respondent and his brother late G.Gurusamy had passed an interim order on 03.08.2006, by allowing the petitioner to open bank account in a Nationalised Bank in the name of the Company and to operate the said company account for carrying out exclusively day-to-day operation of Unit B of the second respondent company. The Company Petition which was filed before the Company Law Board in Company Petition No.29 of 2003, under Section 397 and 398 of the Companies Act, 1956 is still pending before the National Company Law Tribunal after the Company Law Board was taken over by the National Company Law Tribunal. It appears that after the implementation of the Goods and Service Tax, late G.Gurusamy, brother of the petitioner, who was managing the Company had also obtained a Goods and Service 4/9 https://www.mhc.tn.gov.in/judis
W.P.(MD) Nos.7411 & 6623 of 2024 Tax Registration. The Company had failed to comply with the requirements under the Companies Act, 2013 and therefore, the name of the Company was struck off from the Register of Companies. It appears that the name of the Company was struck off as early as 2018 and no steps were taken either by the petitioner or by the petitioner’s brother, late G.Gurusamy.
The facts on record also indicate that the petitioner was required to co-operate with his brother during his life time for restoring the registration of Company to the files of the Registrar of Companies/RD. However, the petitioner has failed to co-operate with his brother, who is now represented by his legal heirs, who have been impleaded as respondents 3 to 5. It appears that the business carried out in Unit A under the control of petitioner’s brother and later by the newly impleaded respondents, namely, respondents 3 to 5 have been stopped. They have taken steps for cancelling the Goods and Services Tax Registration. Unit B, on the other hand, under the control of the petitioner is still carrying on business. The revenue cannot be denied of the tax that is payable for the supplies effected by the petitioner from Unit B and therefore, the private respondents, namely, respondents 3 to 5 cannot have a say by stating that the second respondent itself has ceazed to exist and therefore the petitioner can neither carry on the business nor pay the tax for the supplies already effected. The private dispute between the petitioner and the legal heirs of late G.Gurusamy has to be resolved in the National Company Law Tribunal, which is now seized of the matter. However, as long as there is supply of goods and service from the second respondent from Unit B, there cannot be any embargo from payment of tax. The private respondents also cannot strangulate the business of Unit B under control of the petitioner. 4.At the same time, I am inclined to allow the this Miscellaneous Petition as prayed for. Meanwhile, the petitioner is directed to take steps for revive registration which has been cancelled on account of the failure of the second respondent to file the returns.” 5/9 https://www.mhc.tn.gov.in/judis
W.P.(MD) Nos.7411 & 6623 of 2024
The Department has now issued the impugned notice under Section 74 of the respective GST enactments for proposing to levy penalty on the petitioner for not filing the Return. For the sake of convenience, relevant portion of the impugned notice dated 28.12.2023 for the assessment year 2017-18 reads as under: 6/9 https://www.mhc.tn.gov.in/judis
W.P.(MD) Nos.7411 & 6623 of 2024
In my view, there is no merits in these Writ Petitions. The petitioner has 7/9 https://www.mhc.tn.gov.in/judis
W.P.(MD) Nos.7411 & 6623 of 2024 to await for the orders to be passed by the respondent. In case, any adverse orders are passed, it is always open to the petitioner to work out his remedy in the manner known to law. These Writ Petition are dismissed, with above observations. No costs. Consequently, connected miscellaneous petitions are closed. Index : Yes / No 10.07.2024 Internet : Yes / No apd To The State Tax Officer (ST), O/o.the Assistant Commissioner (ST), Theni-2 Assessment Circle, No.333-A, Madurai Road, SIDCO Compound, Theni. 8/9 https://www.mhc.tn.gov.in/judis
W.P.(MD) Nos.7411 & 6623 of 2024 C.SARAVANAN, J.
apd W.P.(MD) Nos.7411 & 6623 of 2024 10.07.2024 9/9 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.