Tvl.A.K And Co vs. The Proper Officer

Held

The Court quashed the impugned order dated 20.08.2024 and remitted the case back to the respondent for a fresh assessment. The Court's decision was based on balancing the interests of both the petitioner and the respondent and acceding to the petitioner's request. The petitioner was directed to deposit 50% of the disputed tax in cash from their Electronic Cash Register in two installments within two months. Additionally, the petitioner was required to file a reply to the Show Cause Notice dated 29.05.2024, along with supporting documents, within thirty days, treating the impugned order as an addendum to the show cause notice. If these stipulations were complied with, the respondent was to pass a fresh order on merits expeditiously, preferably within three months of the pre-deposit. The attachment of the petitioner's bank account would be vacated upon compliance. The Court also made it clear that if the petitioner failed to comply with any stipulation, the respondent could proceed to recover the tax as if the writ petition was dismissed. The issue of the merits of the demand itself was not decided, as the case was remitted for fresh consideration.

Facts

The petitioner, TVL.A.K and CO, represented by its Proprietrix Tmt. Naveena, filed a writ petition challenging an order dated 20.08.2024 passed by the Assistant Commissioner (State Tax), Sivagangai. This order confirmed a demand proposed in a Show Cause Notice dated 29.05.2024 for the tax period 2019-20, passed due to the petitioner's failure to reply to the notice and attend personal hearings. The demand was based on three grounds: non-reversal of common Input Tax Credit (ITC) or excess ITC claimed due to non-reconciliation, non-declaration of ineligible ITC under Section 17(5) of the SGST Act, 2017, and ITC claimed from cancelled dealers, return defaulters, and tax non-payers. A significant portion of the demand, Rs.28,06,142/-, was for the failure to restrict credit on supplies of both taxable and exempted goods.

Key Issues

1. Whether the impugned order dated 20.08.2024, passed by the Assistant Commissioner (State Tax), Sivagangai, confirming the demand for the tax period 2019-20, is liable to be quashed for gross violation of the principles of natural justice, specifically the lack of a personal hearing. Petitioner's contention: The petitioner argued that the order was passed in gross violation of the principles of natural justice as they were not provided with an adequate opportunity for a personal hearing, despite the issuance of reminders. They sought to quash the order and have the assessment redone. Respondent's contention: The respondent, represented by the Government Advocate (Taxes), did not explicitly argue against the petitioner's claim of violation of natural justice but noted that the petitioner failed to opt for the personal hearings offered and did not file a reply to the Show Cause Notice. The respondent also highlighted that the petitioner approached the court long after the impugned order was passed, suggesting the petitioner should have availed the statutory appeal remedy under Section 107 of the GST enactment.