Tvl M Muthupandi vs. Deputy State Tax Officer - 1

Facts

The petitioner, Tvl.M.Muthupandi, a contractor, filed two writ petitions challenging assessment orders passed by the Deputy State Tax Officer-1, Madurai. The impugned orders dated 03.04.2023 and 16.05.2023 imposed demands of Rs. 1,78,421/- for the year 2018-19 and Rs. 8,67,788/- for the year 2019-20, respectively. These orders followed Show Cause Notices issued under Section 74 of the GST enactment. The petitioner did not reply to the Show Cause Notices due to undergoing treatment for a kidney ailment. The petitioner had paid the full demand for 2018-19 and a partial amount of Rs. 5,76,810/- for 2019-20. The demands were based on discrepancies in Input Tax Credit (ITC) between GSTR 2A and GSTR 3B returns, and between GSTR 07 and GSTR 3B.

Held

The Court decided to quash the impugned assessment orders and remit the cases back to the respondent for fresh consideration. The Court acknowledged the petitioner's submission that they were undergoing treatment for a kidney ailment, which prevented them from replying to the Show Cause Notices. The Court also noted that the petitioner had paid a significant portion of the demand. While the respondent argued that the petitions were time-barred, the Court, considering the petitioner's predicament and the payments made, was inclined to provide relief. The Court directed that the impugned orders be treated as addendums to the respective Show Cause Notices. The petitioner was granted 30 days to file a consolidated reply, and the respondent was directed to pass fresh orders on merits and in accordance with law, preferably within two months, after hearing the petitioner. The Court did not expressly leave any issue undecided.

Key Issues

1. Whether the assessment orders passed by the respondent are liable to be quashed on the grounds of procedural irregularities and lack of opportunity to the petitioner, considering the petitioner's medical condition and the nature of the discrepancies cited, turning on Section 74 of the GST enactment? Petitioner's arguments: The petitioner contended that the assessment orders should be quashed and the proceedings remitted back to the respondent for a proper explanation. They argued that a proper reconciliation could be made with a certificate from the government department, and the tax liability might not be as determined. The petitioner also highlighted their medical condition (kidney ailment) as the reason for not responding to the Show Cause Notices and sought one opportunity to explain their case. They relied on the fact that substantial amounts had already been paid. Respondent's arguments: The respondent opposed the petitions, arguing that they were hopelessly time-barred and liable to be dismissed due to laches. The respondent cited the Supreme Court's decision in Assistant Commissioner (CT) LTU, Kakinada and others vs. Glaxo Smith Kline Consumer Health Care Limited. They also argued that the appellate remedy was time-barred under Section 107 of the GST enactments, referencing the Supreme Court's decision in Singh Enterprises Vs. Commissioner of Central Excise, Jamshedpur and others, and therefore, the writ petitions should be dismissed.