Tvl. Venus Textiles vs. The Deputy State Tax Officer 1
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The petitioner, Tvl. Venus Textiles, filed two writ petitions challenging orders issued by the Deputy State Tax Officer-1. The first petition (W.P.(MD) No. 13753 of 2024) pertains to the assessment year 2018-19, and the second (W.P.(MD) No. 13754 of 2024) to the assessment year 2019-20. The petitioner's GST registration was cancelled on 08.01.2019, with effect from 20.08.2017, following a show cause notice issued under Rule 22(1) of the TNGST Act, 2017. The impugned orders relied on GSTR-3B returns and GSTR-2A data, which the petitioner argued were technically impossible to have been filed or generated after the cancellation of their registration. The petitioner admitted to not replying to the show cause notices or attending personal hearings due to the cancellation of their registration.
Held
The Court held that the petitioner had made out a case for interference with the impugned orders due to a contradiction. The Court found it untenable for the petitioner to have filed GSTR-3B returns when their GST registration was cancelled on 08.01.2019. While acknowledging that the petitioner had not replied to the show cause notices or participated in personal hearings, the Court viewed the matter as deserving remission back to the respondent for fresh orders on merits. As a condition for hearing the case afresh, the petitioner was directed to deposit 10% of the disputed tax in cash or through the Electronic Cash Register within 30 days of receiving the order, along with their reply to the show cause notices. The impugned orders were to be treated as addendums to the show cause notices. The respondent was directed to pass fair orders on merits within two months thereafter, ensuring the petitioner was heard. The Court did not expressly leave any issue undecided.
Key Issues
1. Whether the impugned orders, which rely on GSTR-3B returns and GSTR-2A data, are valid when the petitioner's GST registration was cancelled prior to the periods for which these documents were purportedly used, and thus technically impossible to have been filed or generated by the petitioner? This issue turns on the interpretation and application of the relevant GST provisions concerning the validity of tax assessments based on data generated after registration cancellation. Petitioner's arguments: The petitioner contended that the impugned orders suffer from a clear non-application of mind because they are based on GSTR-3B and GSTR-2A data, which could not have been filed or generated by them after their GST registration was cancelled on 08.01.2019, with effect from 20.08.2017. They argued that they had not filed any returns for the disputed periods and that the department incorrectly applied Rule 30 of the GST Rules by adding 110% to the inward supply value from auto-populated GSTR-2A. They sought an opportunity to explain their position. Respondent's arguments: The respondent argued that both writ petitions are time-barred, citing the Supreme Court's decision in Assistant Commissioner (CT) LTU, Kakinada and others vs. Glaxo Smith Kline Consumer Health Care Limited. They further argued that the period for filing a statutory appeal under Section 107 of the TNGST Act, 2017, was also time-barred, referencing the Supreme Court's ruling in Singh Enterprises Vs. Commissioner of Central Excise, Jamshedpur and others.
Sections Cited
Rule 22(1), Rule 30, Section 107
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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 disposed of after hearing the learned counsel for the petitioner and the learned Government Advocate for the respondent. 2/8 https://www.mhc.tn.gov.in/judis
W.P.(MD) Nos.13753 & 13754 of 2024
The learned counsel for the petitioner submits that the petitioner’s GST registration was cancelled on 08.11.2019 with effect from 20.08.2017 pursuant to the show cause notice issued to the petitioner in Form GST REG 17 under Rule 22(1) of TNGST Act, 2017, on 06.12.2018. 3. It is submitted that the reason for cancelling the registration was that the petitioner had not filed any Return for a period in dispute which is covered by the Writ Petition in W.P.(MD)No.13753 of 2024. 4. It is further submitted by the learned counsel for the petitioner that the petitioner has also not renewed the registration, after it was cancelled on 08.01.2019. 5. It is further submitted that the impugned orders, which relies on GSTR- 3B purportedly filed by the petitioner for the respective assessment years and GSTR 2A, auto populated inputs in GSTR 2A against the petitioner's GSTIN, are technically impossible, as the the petitioner's GST registration was cancelled on 08.01.2019 with effect from 20.08.2017 pursuant to the show cause notice issued 3/8 https://www.mhc.tn.gov.in/judis
W.P.(MD) Nos.13753 & 13754 of 2024 to the petitioner in Form GST REG 17 under Rule 22(1) of TNGST Act, 2017, on 06.12.2018. 6. It is submitted that the petitioner has not filed any return either in GST DRC 01 or GSTR-3B for the respective assessment years. Without taking into account the same, the Department has come to the conclusion that there were inward supply of goods by third party suppliers and has applied Rule 30 of the GST Rules and has confirmed the tax by adding 110% to the inward value of supply in the auto populated ITC in GSTR-2A.
It is submitted that there is a clear non application of mind in the respective impugned orders. However, the petitioner fairly submits that the petitioner has neither replied to the show cause notice nor appeared for personal hearing as the petitioner's registration was cancelled as early as 08.01.2019 with effect from 20.08.2017. Hence, prays that the impugned orders be quashed.
The learned counsel for the petitioner further submits that the petitioner may be given one opportunity to explain the position as admittedly, the petitioner 4/8 https://www.mhc.tn.gov.in/judis
W.P.(MD) Nos.13753 & 13754 of 2024 has not also participated in the personal hearing by filing replies to the show cause notices that preceded the impugned orders.
The learned Government Advocate for the respondent, on the other hand, submits that both the Writ Petitions are time barred and liable to be dismissed in the light of the decision of the Hon'ble Supreme Court in the case of Assistant Section 107 of the TNGST Act, 2017, as held by the Hon'ble Supreme Court in 5/8 https://www.mhc.tn.gov.in/judis
W.P.(MD) Nos.13753 & 13754 of 2024 of the view that the petitioner has made out the case for interference with the impugned orders as there is a contradiction. Since the petitioner's registration was cancelled on 08.01.2019, the question of the petitioner filing the Return in GST DRC 3B cannot be countenanced.
It appears that since the petitioner has neither also replied to the show cause notices nor participated in the personal hearings. This Court is, therefore, of the view that the matter deserves to be remitted back to the respondent to pass fresh orders on merits. Considering the fact that the petitioner may have had outward supply of goods during the period in dispute, as a condition for hearing the case afresh, the petitioner shall deposit 10% of the disputed tax under the respective Writ Petitions in cash or through Electronic Cash Register, if the same is accessible.
The impugned orders, which stand quashed shall be treated as addendum to the respective show cause notices that preceded the impugned orders. It is expected that the petitioner shall deposit the aforesaid amount along with the reply to the show cause notices within 30 days from the date of receipt 6/8 https://www.mhc.tn.gov.in/judis
W.P.(MD) Nos.13753 & 13754 of 2024 of a copy of this order.
It is expected that the respondent shall pass fair orders 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 also be heard before passing the order in the demand proceedings. These Writ Petitions are disposed of, with above directions. No costs. Consequently, connected miscellaneous petitions are closed. Index : Yes / No 27.06.2024 Internet : Yes / No apd To The Deputy State Tax Officer-1, O/o.the Commercial Tax Officer, Karur-4 Assessment Circle, Karur, Erode. 7/8 https://www.mhc.tn.gov.in/judis
W.P.(MD) Nos.13753 & 13754 of 2024 C.SARAVANAN, J.
apd W.P.(MD) Nos.13753 & 13754 of 2024 27.06.2024 8/8 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.