Sree Maruthi Traders vs. The State Tax Officer (Inspection Cell)

Facts

The petitioner, M/s.Sree Maruthi Traders, filed three writ petitions challenging show cause notices issued by the State Tax Officer, (Inspection Cell), Virudhunagar. These notices pertained to the tax periods 2017-2018, 2018-2019, and 2019-2020, and were dated 21.09.2020. The petitioner argued that the notices were issued without application of mind, as the respondent had previously received a statement from the seller on 05.11.2019, admitting liability for the tax. The petitioner had also submitted detailed replies to earlier notices dated 20.05.2020, and further clarifications on 09.09.2020, which they contended were not considered before the issuance of the impugned show cause notices.

Held

The Court held that the challenge to the show cause notices was premature as no final orders had been passed by the respondent. It acknowledged the petitioner's apprehension that their replies and supporting documents, including the seller's statement admitting liability, had not been considered. However, the Court stated that during the final adjudication process, all objections raised by the petitioner in their replies and the supporting documents must be necessarily considered by the respondent. Therefore, the Court directed the respondent to consider the petitioner's replies dated 05.06.2020 and 09.09.2020, along with all supporting documents, including the seller's statement, and pass final orders on merits and in accordance with law within eight weeks. The ratio decidendi is that while writ petitions can challenge notices issued without authority, challenges based on non-consideration of replies are generally premature until final orders are passed, and such considerations must be made during the final adjudication.

Key Issues

1. Whether the impugned show cause notices, issued under Section 74(5) of the Tamil Nadu Goods and Services Tax Act, are liable to be quashed as illegal and issued without authority of law, given the petitioner's contention that the respondent failed to consider their replies and supporting documents, including a seller's admission of liability. Petitioner's Arguments: The petitioner contended that the show cause notices were bad in law because the respondent, instead of proceeding against the seller who admitted liability, issued notices to the petitioner as the purchaser. They argued that the respondent acted arbitrarily and without applying their mind to the detailed replies and clarifications submitted by the petitioner on 05.06.2020 and 09.09.2020, along with supporting documents. The petitioner relied on the principle that a show cause notice can be challenged in writ jurisdiction if issued without authority. Revenue's Arguments: The judgment does not record any specific arguments made by the respondent. However, the respondent's counsel accepted notice and appeared before the court.