Shanmugaraj Geetha vs. The Deputy State Tax Officer
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The petitioner, Shanmugaraj Geetha, a small-time dealer of Dhall, filed a writ petition challenging an order dated 26.06.2023 passed by the Deputy State Tax Officer. This order was preceded by notices ASMT 10 (07.02.2022), DRC 01A (27.04.2022), and DRC 01 (15.02.2023). The petitioner claimed these notices went unnoticed. The dispute arose due to a mismatch between GSTR 1 and GSTR 3B returns for the assessment year 2017-18. The petitioner's accountant mistakenly included the value of exempted Dhall sales into the taxable turnover in GSTR 3B, leading to the confirmed demand. The petitioner admitted the mistake but attributed the order to their failure to respond to the show cause notice proceedings.
Held
The Court held that the petitioner deserved an opportunity to explain their case before the respondent, acknowledging that there appeared to be an error in the entries made in the GSTR 3B return concerning exempted sales. The Court reasoned that while the petitioner had made a mistake and failed to participate in the proceedings, the nature of the error (inclusion of exempted sales) warranted a reconsideration. The impugned order was set aside, and the case was remitted back to the respondent for a fresh order on merits. This relief was granted subject to the petitioner depositing 25% of the disputed tax to the credit of the respondent through its Electronic Cash Register. The Court directed that the impugned order, now quashed, would be treated as an addendum to the show cause notice. The deposit was to be without prejudice to the petitioner's rights on merits. If the demand was dropped, the deposit would be returned or adjusted; if confirmed, it would be appropriated, and the balance recovered. Failure to deposit within the stipulated period would lead to the writ petition being dismissed. The Court did not expressly leave any issue undecided.
Key Issues
1. Whether the petitioner should be granted an opportunity to explain the alleged mistake in their GSTR 3B return, despite failing to respond to the preceding notices and show cause notice, considering the potential for an error in reporting exempted sales? (Mixed question of law and fact, concerning principles of natural justice and procedural fairness). Petitioner's Arguments: The petitioner argued that the impugned order and preceding notices were overlooked due to their status as a small dealer and an error made by their accountant. They admitted the mistake in including exempted sales in the taxable turnover in GSTR 3B. They sought an opportunity to explain the situation and were willing to deposit any amount as a condition for a fresh hearing. They relied on the principle that an opportunity to explain should be given. Respondent's Arguments: The respondent contended that the writ petition was devoid of merits and should be dismissed, citing 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 any appeal at this stage would be time-barred under Section 107 of the TNGST Act, 2017, referencing the Supreme Court's ruling in M/S. Singh Enterprises Vs. Commissioner of Central Excise, Jamshedpur and others.
Sections Cited
Section 107
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Before: and
Heard Mr.S.Karunakar, learned counsel for the petitioner and Mr.R.Suresh Kumar, learned Additional Government Pleader for the respondent. 2.The petitioner is aggrieved by the impugned order dated 26.06.2023 passed by the respondent for the assessment year 2017-18. 3.The impugned order has preceded the notices in ASMT 10 dated 07.02.2022, DRC 01A dated 27.04.2022 and DRC 01 dated 15.02.2023. However, the petitioner failed to reply to the same and has thus suffered the impugned order dated 26.06.2023. 4.The case of the petitioner is that the impugned order as also the notices that preceded the impugned order went unnoticed, as the petitioner is a small time dealer engaged in supply of food articles, namely Dhall. It is submitted that the dispute has arisen on account of mismatch between the returns filed by the petitioner in GSTR 1 and GSTR 3B. 2/7 https://www.mhc.tn.gov.in/judis
It is submitted that by mistake, the Accountant has included the value of sale of the exempted sale of Dhall exempted under Notification No.2/2017-CT dated 28.06.2017 into the taxable turn over in Form GSTR 3B, as a result of which the demand has been confirmed. 6.The learned counsel for the petitioner submits that there is no dispute that the petitioner had committed the mistake and that the impugned order has confirmed the demand, only because the petitioner did not participate in the show cause notice proceeding, which preceded the impugned order. 7.It is submitted that the petitioner may be given an opportunity to explain the same. It is submitted that the petitioner is willing to deposit any amount. The Court may impose any amount on the petitioner as condition for the case to be heard afresh de nova. 8.The learned Additional Government Pleader for the respondent would submit that the writ petition is devoid of merits and is liable to be dismissed in the light of the decision of the Hon'ble Supreme Court in Assistant Commissioner 3/7 https://www.mhc.tn.gov.in/judis (CT) LTU, Kakinada and others Vs. Glaxo Smith Kline Consumer Health Care Limited reported in 2020 SCC Online SC 440. 9.It is submitted that even the appeal at this stage will be time barred in terms of the limitation prescribed under Section 107 of the TNGST Act, 2017, in the light of the decision of the Hon'ble Supreme Court in M/S.Singh Enterprises Vs. Commissioner of Central Excise, Jamshedpur and others reported in (2008) 3 SCC 70. 10.Having considered the submissions made by the learned counsel for the petitioner and the learned Additional Government Pleader for the respondent, I am of the view that the petitioner deserves an opportunity to explain the case before the respondent, considering the fact that there appears to be an error in the entries made by the petitioner in GSTR 3B. The petitioner may have to explain the same with suitable documents. 11.Under these circumstances, the impugned order is set aside and the case is remitted back to the respondent to pass a fresh order on merits and in 4/7 https://www.mhc.tn.gov.in/judis accordance with law subject to the petitioner depositing 25% of the disputed tax to the credit of the respondent through its Electronic Cash Register. 12.The impugned order, which stands quashed, shall be treated as addendum to the show cause notice in DRC 01 dated 15.02.2023. Needless to state that the petitioner shall be heard and the amount to be paid by the petitioner as condition for the case to be reheard shall be without prejudice to the rights of the petitioner on merits. 13.In case, the demand is dropped, the amount shall be returned or adjusted against the future tax liability of the petitioner. In case, the demand is confirmed, the amount shall be appropriated and the balance be recovered from the petitioner in the manner known to law. In case, the petitioner fails to deposit the amount within the aforesaid period, it will be construed as this writ petition was dismissed at the time of admission. 5/7 https://www.mhc.tn.gov.in/judis
The Writ Petition stands allowed, accordingly. No costs. Consequently, connected Miscellaneous Petition is closed. Index : Yes / No 12.07.2024 Internet : Yes / No mm To The Deputy State Tax Officer, O/o. the Assistant Commissioner (State Taxes), Aruppukottai Circle, Aruppukottai. 6/7 https://www.mhc.tn.gov.in/judis C.SARAVANAN, J.
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2024 7/7 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.