Tvl. Vel Agency vs. The State Tax Officer

Facts

The petitioner, Tvl. Vel Agency, filed a writ petition challenging an order dated 22.03.2024 passed by the first respondent, the State Tax Officer, for the assessment period 2018-19. The impugned order confirmed a demand based on a variance between the petitioner's GSTR 3B and the auto-populated GSTR 2A, amounting to Rs. 3983.65. The petitioner contended that the demand was confirmed despite this small variance. However, the respondents noted that the petitioner failed to respond to multiple notices, including DRC 01A, DRC 01, and personal hearing notices, issued between October 2023 and March 2024. The respondents also argued that the writ petition was time-barred due to the petitioner's latches and that the appellate remedy under Section 107 of the GST enactments was also time-barred.

Held

The Court, while acknowledging the respondents' arguments regarding latches and the time-barred nature of the writ petition and appellate remedy, found that the petitioner might have a case on merits. The Court exercised its discretion partly in favour of the petitioner. The impugned order dated 22.03.2024 was quashed. This quashing was made conditional upon the petitioner depositing 25% of the disputed tax amount of Rs. 3983.65 into the credit of the respondent from their Electronic Cash Register within 30 days. The quashed order was to be treated as an addendum to the preceding show cause notice. The petitioner was directed to file a reply within 30 days of receiving the order, and the respondent was to pass fresh orders on merits and in accordance with law within two months thereafter, ensuring the petitioner was heard before such fresh order. The ratio decidendi is that in exceptional circumstances, even with procedural lapses, a High Court may exercise its writ jurisdiction to allow a party to present their case on merits, subject to certain conditions, especially when the disputed amount is small and there's a possibility of a valid defence.

Key Issues

1. Whether the impugned order dated 22.03.2024, passed by the State Tax Officer, is liable to be quashed on merits, considering the petitioner's contention that the demand was confirmed based on a minor variance between GSTR 3B and GSTR 2A. 2. Whether the writ petition is liable to be dismissed on the grounds of latches and being time-barred, as argued by the respondents, citing the Supreme Court decisions in Assistant Commissioner (CT) LTU, Kakinada vs. Glaxo Smith Kline Consumer Health Care Limited and Singh Enterprises vs. Commissioner of Central Excise, Jamshedpur. Petitioner's contentions: The petitioner argued that the demand confirmed by the impugned order was based solely on a variance of Rs. 3983.65 between their GSTR 3B and the auto-populated GSTR 2A, implying this variance might be explainable or not substantial enough to warrant the order without further consideration. Respondents' contentions: The respondents contended that the writ petition should be dismissed as it is hopelessly time-barred due to the petitioner's latches. They further argued that the appellate remedy under Section 107 of the GST enactments is also time-barred, relying on Supreme Court precedents.