M/S. Sadhurmugan Traders vs. The State Tax Officer (Insp)
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The petitioner, M/s. Sadhurmugan Traders, is challenging a show cause notice dated January 7, 2022, issued by the respondent, The State Tax Officer (Inspection). This is the second round of litigation. Previously, an assessment order dated March 2, 2020, for the period 2018-2019 was passed. The petitioner had filed writ petitions challenging this order, which were allowed on August 31, 2020, setting aside the assessment order. The department's appeal against the dropping of certain proposals was dismissed as not maintainable on March 14, 2022. The current show cause notice contains several proposals, including verification of ITC eligibility based on goods movement, vehicle details for inward supplies, discrepancies between purchase registers and e-way bills, suspicion of goods movement to related parties, re-quantification of GSTR-3B and GSTR-2A discrepancies for April-June 2018, and discrepancies between sales registers and outward e-way bills.
Held
The Court held that the assessment order dated March 2, 2020, was completely set aside by this Court's order dated August 31, 2020, without any restriction or qualification. Consequently, the department's appeal was dismissed as not maintainable. The Court found no merit in the petitioner's contention that the new proposals in the impugned show cause notice dated January 7, 2022, were beyond the scope of the original notice dated December 20, 2019. The Court observed that the so-called new proposals prima facie appeared to be covered by the first six proposals in the original notice and were interconnected. Therefore, the challenge to the impugned show cause notice was found to be without merit. However, the Court directed the petitioner to file a detailed reply, including the objections raised in the writ petition, before the respondent. The respondent was directed to consider the reply and pass appropriate orders on merits and in accordance with law within eight weeks from the date of receipt of the order.
Key Issues
1. Whether the proposals in the show cause notice dated January 7, 2022, are beyond the scope of the original show cause notice dated December 20, 2019, and thus impermissible in remand proceedings, particularly concerning Section 73 of the CGST Act, 2017 (or equivalent SGST Act provisions)? Petitioner's arguments: The petitioner contends that the new proposals in the impugned show cause notice dated January 7, 2022, go beyond the scope of the original show cause notice dated December 20, 2019. They argue that demands previously dropped by the respondent cannot be re-agitated. The petitioner relies on the principle that remand proceedings should not exceed the scope of the original notice. Respondent's arguments: The respondent argues that this Court's order dated August 31, 2020, in W.P.(MD).No.8161 of 2020 etc. batch, set aside the entire assessment order dated March 2, 2020, and remitted the case back to the respondent for a fresh order. They submit that the new proposals are not entirely new but are further explanations sought regarding the initial six proposals, and therefore, the show cause notice does not go beyond the scope of earlier proceedings. The respondent urges the petitioner to submit to their jurisdiction.
Sections Cited
Section 73
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Before: and
This is a second round of litigation by the petitioner. Earlier, the petitioner had suffered an assessment order for the assessment year 2018-2019 on 02.03.2020. The part of the demand was confirmed in the part of the proposal was dropped.
Aggrieved by the same, petitioner had filed W.P.(MD).No.8161 of 2020 etc. batch. Aggrieved by the portion dropping the proposals, the department has filed an appeal before the appellate authority. The aforesaid writ petitions were allowed vide order dated 31.08.2020. Consequent to the aforesaid order of this Court on 31.08.2020, the appeal filed by the department was also dismissed as 1/3 https://hcservices.ecourts.gov.in/hcservices/ not maintainable vide order dated 14.03.2022. The petitioner has been now issued with an impugned show cause notice, dated 07.01.2022. The show cause notice is challenged on the ground that apart from the demands propsed in the earlier proceedings, there were proposals in the impugned order dated 20.12.2019. The so-called several new proposals as detailed below: (i) To verify the eligibility of ITC claimed based on the movement of goods. (ii) Vehicle details not found with respect to 5 inward supply tax invoices (iii) Discrepancies between purchase register and inward e-way bills. (iv) Suspicion with respect to movement of goods to related parties (v) Re-quantifying the discrepancies in GSTR-3B and GSTR- 2A for the Month of April 2018, May 2018 and June 2018. (vi) Discrepancies between sales register and outward e- way bills.
It is submitted that these proposals are beyond the scope of the original show cause notice, dated 20.12.2019. Therefore, it is submitted that in the remand proceedings, the respondent cannot go beyond the scope of the original show cause notice, dated 20.12.2019. That apart, the learned counsel for the petitioner submits that the demand was dropped by the respondent in an earlier round cannot be reagitated once again.
Opposing the prayer, the learned Additional Government Pleader for the respondent submits that the order of this Court in W.P.(MD).No.8161 of 2020 etc. batch on 31.08.2020 has set aside the entire assessment order, dated 02.03.2022 and had remitted the case back to the respondent to pass a fresh order. It is submitted that as a consequence of said order, the department’s appeal was also dismissed as not maintainable on 14.03.2022. It is therefore submitted that there is no merit in the submission of the learned counsel for the petitioner. That apart, it is submitted that the new proposals are not new proposals. Only further explanation has been called from the petitioner in respect of the first six proposals. Therefore, it cannot be said that the show cause notice go beyond the scope of the earlier proceedings. It is therefore submitted that the petitioner should submit to the juri iction of the respondent.
I have considered the arguments advanced by the learned counsel for the petitioner and the learned Additional Government Pleader for the respondent.
The assessment order which was earlier passed on 02.03.2020 has been set aside by this Court by its order, dated 31.08.2020. There is no restriction or qualification in the said order. The order dated 02.03.2020 completely stands quashed. Therefore, the department’s appeal was also dismissed as not maintainable. 2/3 https://hcservices.ecourts.gov.in/hcservices/ Therefore, I am unable to accept the contention of the learned counsel for the petitioner. The petitioner has to answer to the proposals contained in the show cause notice dated 20.12.2019, content of which has been incorporated in the impugned show cause notice dated 07.01.2022. The so-called new proposals appears to be prima facie covered by the first six proposals in the show cause notice, dated 20.12.2019. They are inter connected. Therefore, I do not find any merits in challenge to the impugned show cause notice by the petitioner.
Be that as it may, I direct the petitioner to file a detailed reply including objections which has been raised in this writ petition before the respondent. The respondent shall consider the same and pass appropriate orders on merits and in accordance with law within a period of eight weeks from the date of receipt of copy of this order. No costs. Consequently, the connected miscellaneous petition is closed. Assistant Registrar (Records) //// / /2022 Sub Assistant Registrar(CS) sn To The State Tax Officer (Insp.) Inspection Cell-1, O/o.The Deputy Commissioner (ST), (Inspection), Madurai. +1 CC to M/s.SPL.GP ( SR-19370[F] dated 19/04/2022 )
2022 RK(12/05/2022) 3P 3C 3/3 https://hcservices.ecourts.gov.in/hcservices/
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.