Tvl.Karthic Kumar vs. The Additional Director General (Adg)

Facts

The petitioner, Tvl. Karthic Kumar, filed a writ petition challenging an order dated 29.08.2025 passed by the Third Respondent (State Tax Officer) for the tax period April 2024 to December 2024. This order was issued pursuant to a show cause notice dated 28.02.2025. The petitioner had submitted a reply on 25.05.2025 but did not appear for personal hearings despite three notices. The impugned order confirmed a demand, appearing to be for excess Input Tax Credit (ITC) availed compared to GSTR-2B, which the petitioner attributed to their accountant's failure to remit payments. The petitioner had paid interest of Rs. 1,55,724/- each under CGST and SGST via DRC-03.

Held

The Court held that the petitioner cannot be exonerated from tax liability merely because the amount was paid to their accountant, who subsequently failed to remit it to the department. The Court reasoned that it is incumbent upon the petitioner to ensure that any amount paid to an employee or accountant towards tax liability is duly remitted to the department. If the employee fails to remit, it is the petitioner's responsibility to recover the amount from that employee. Therefore, the petitioner cannot escape their statutory obligation to pay tax. The Court found no merit in the challenge to the impugned order. However, the Court granted the petitioner liberty to challenge the impugned order on merits before the Appellate Authority within 30 days of receiving a copy of the order. The Writ Petition was dismissed with this liberty.

Key Issues

1. Whether the petitioner can be exonerated from tax liability on the grounds that the amount was paid to their accountant who failed to remit it to the department? This issue turns on the petitioner's responsibility to ensure tax remittance. Petitioner's arguments: The petitioner contended that they entrusted the responsibility of tax remittance to their accountant, to whom they paid the tax amounts monthly. They argued that since the accountant failed to remit the collected amounts to the department, the petitioner should not be held liable for the non-remittance and should be absolved of penalty and interest. Revenue's arguments: The respondents did not explicitly record arguments in the judgment. However, the court's reasoning implies that the revenue contended that the petitioner is ultimately responsible for ensuring the tax liability is discharged to the department, irrespective of any internal arrangements with an employee or accountant.