Sri Saravana Enterprises vs. The State Tax Officer (Inspection-Iii)

Held

The Court held that the petitioner had been negligent in not participating in the proceedings initiated by the DRC-01 notices. The Court found no excuse for the petitioner to have ignored these notices and subsequently filed a writ petition. The challenge to the circulars was dismissed, as there was no embargo on the revenue authorities to inspect business premises and record statements. The Court referred to Circular No.13/2022-TNGST, as modified by Circular No.11/2023, which addressed the issue. As a concession, the Court granted the petitioner one opportunity to respond, subject to depositing 10% of the disputed tax within eight weeks. The impugned orders were to be treated as addendums to the DRC-01 notices. The petitioner was directed to file a reply for each assessment year within 12 weeks, after which the fourth respondent would pass final orders within two months. Failure to comply with the deposit or reply filing would result in the dismissal of the writ petitions, allowing the respondents to proceed after 91 days from the order date.

Facts

The petitioner, Sri Saravana Enterprises, filed multiple writ petitions challenging assessment orders for tax periods 2017-18 to 2023-24 and certain circulars issued by the GST authorities. The petitioner's business premises were inspected in October 2023, and statements were recorded on October 30, 2023. Subsequently, show cause notices in DRC-01 were issued, leading to the impugned orders. The petitioner argued that the initiation of proceedings and adjudication were void and contrary to GST enactments, and the circulars were also liable to be quashed. The petitioner admitted to failing to respond to the DRC-01 notices. The revenue contended that the issue was covered by a previous High Court decision and prayed for dismissal, but suggested liberty to appeal.

Key Issues

1. Whether the initiation of proceedings under DRC-01 and adjudication by the respondents are void and contrary to the scheme of GST enactments, as contended by the petitioner? 2. Whether the impugned Circulars No.13/2022 and 11/2023 are liable to be quashed for being contrary to the scheme of GST enactments, as argued by the petitioner? Petitioner's Contentions: The petitioner argued that the entire process, from the issuance of DRC-01 notices to the adjudication by the first respondent, was void and contrary to the GST enactments. They also contended that the impugned circulars were contrary to the scheme of the GST enactments. The petitioner admitted to failing to respond to the DRC-01 notices. Revenue's Contentions: The revenue argued that the issue was covered by the High Court's decision in M/s.Rasathe Garments vs. The State Tax Officer (ST) (Inspn.), Tirunelveli. They further submitted that the petitioner had wilfully failed to participate in the adjudication mechanism and prayed for dismissal of the writ petitions. However, the revenue suggested granting liberty to the petitioner to challenge the orders before the Appellate Commissioner, acknowledging that the limitation period might have expired.