Nila Traders vs. The Deputy Commercial Tax Officer

Held

The Court held that the petitioner may have a case on merits. While acknowledging the respondent's arguments regarding latches and the availability of alternative remedies, the Court chose to exercise its discretion in favour of the petitioner. The impugned orders were set aside. The cases were remitted back to the respondent for passing fresh orders on merits. This decision was made conditional upon the petitioner depositing 25% of the disputed tax liability (Rs. 42,35,428/-) to the credit of the respondent from their Electronic Cash Register within 30 days. The Court directed that the set-aside orders would be treated as addendums to the original show cause notices. The petitioner was given 30 days from the receipt of the order to file their reply, along with the deposit. The respondent was directed to pass fresh orders expeditiously, preferably within two months, after hearing the petitioner. No specific issue was left undecided, but the primary focus was on procedural fairness and allowing the petitioner to present their case on merits.

Facts

The petitioner, Nila Traders, filed two writ petitions challenging orders dated 17.10.2023 issued by the Deputy Commercial Tax Officer, Dindigul (Rural). These orders were preceded by notices in DRC 01A dated 21.06.2023 and DRC 01 dated 28.08.2023 for the assessment years 2021-22 and 2022-23. The petitioner claimed they failed to notice these communications as they were posted on the GST common portal, leading to their failure to reply and consequently the impugned orders. The petitioner stated they have an arguable case on merits and face a cumulative tax liability of Rs. 42,35,428/- under the impugned orders.

Key Issues

1. Whether the impugned orders, passed for assessment years 2021-22 and 2022-23, should be quashed on the grounds of illegality and arbitrariness, considering the petitioner's failure to respond to preceding notices due to non-receipt or non-observation of communications on the GST portal? (Mixed question of law and fact, turning on principles of natural justice and procedural fairness). Petitioner's contentions: The petitioner argued that they have an arguable case on merits and were unjustly subjected to a significant tax liability. They claimed failure to notice the notices and orders due to their posting on the GST portal, preventing them from responding or approaching the court earlier. Respondent's contentions: The respondent argued that the writ petitions are devoid of merits and liable for dismissal due to the petitioner's latches, citing the Supreme Court's decision in Assistant Commissioner (CT) LTU, Kakinada and others vs. Glaxo Smith Kline Consumer Health Care Limited. The respondent further contended that the appellate remedy is time-barred under Section 107 of the respective GST Enactments, referencing Singh Enterprises Vs. Commissioner of Central Excise, Jamshedpur and others, and thus the petitions should be dismissed.