Back
2025 Supreme(Mad) 4132
IN THE HIGH COURT OF JUDICATURE AT MADRAS
MOHAMMED SHAFFIQ, J.
M/s.SDS Enterprises, Rep. by its proprietor Mr.S.Dillibabu - Appellant
Versus
State Tax Officer - Respondent
W.P. No.1587 of 2025 and W.M.P.Nos.1806 and 1807 of 2025
Decided on : 27-01-2025
Advocate Appeared:
For the Appellant : Mr.R.Anish Kumar
For the Respondents: Mr.T.N.C.Kaushik Additional Government Pleader
The necessity of following natural justice in tax assessments is paramount, mandating proper notice and opportunity to the taxpayer for any discrepancies identified.
Headnote:(A) Goods and Services Tax Act - Sections 86B and 122 - Violation of principles of natural justice due to failure in service of notice and orders - Rectification orders modifying penalties were challenged - Issues of opportunity and procedural fairness arose due to lack of proper communication of orders leading to assessment confirmation. (Paras 2, 4, 5)
(B) Right to be heard - The court reinforced the necessity of affording the petitioner an opportunity to explain discrepancies before finalizing tax penalties, emphasizing the principles of natural justice and the necessity for a fair hearing. (Paras 6, 7)
(C) Writ petitions disallowed for not complying with tax obligations and procedural norms; petitioner permitted to settle dues to prevent restoration of original assessment order.
Result: Writ petition stands disposed of with directions regarding disclosures and compliance.
| Table of Content |
|---|
| 1. challenge to assessment order based on natural justice. (Para 1 , 2 , 3 , 4) |
| 2. petitioner's request for opportunity and payment arrangement. (Para 5 , 6) |
| 3. consent and conditions for withdrawal of order. (Para 7) |
| 4. no costs awarded in the decision. (Para 8) |
ORDER :
The present writ petition is filed challenging the impugned order dated 17.05.2024 and the consequential rectification orders passed by the respondent, on the premise that the same is made in violation of principles of natural justice.
2. It is submitted by the learned counsel for the petitioner that the petitioner is engaged in the business of manufacturing plates, sheets, film, foil, strip of plastic, etc., and registered under the GST Act. During the relevant period of 2021-22, the petitioner filed its returns and paid appropriate taxes. While so, there was an inspection of the petitioner's place of business on 24.08.2023. During the course of the inspection the following defects were inter alia noticed:
i) Rule 86B Restrictions on use of amount available in electronic credit ledger.
ii) Purchases effected from registration cancelled dealers.
iii) Annual return in Form GSTR-9 and Reconciliation Statement GSTR- 9C not filed.
iv) Issued invoices without actual movement of goods (Penalty under Section 122(1) (ii))
3. It is submitted by the learned counsel for the petitioner that a notice in Form DRC01A was issued to the petitioner on 19.03.2024, followed by a notice in DRC 01 on 02.04.2024. Thereafter, three reminders viz., 15.04.2024, 22.04.2024 and 26.04.2024 was also issued to the petitioner. However, the petitioner did not respond to the above notices/intimation. The impugned order was thus passed confirming the proposal. The relevant table of the impugned order is extracted hereunder:
| Sl No. | Particular | Year | CGST | SGST | Interest | Penalty | TOTAL | ||
| CGST | SGST | CGST | SGST | ||||||
| 1 | Rule 86B. Restrictions on use of amount available in electronic credit ledger. | 2021- 2022 | 799992 | 799992 | 306540 | 306540 | 2213064 | ||
| 2 | Purchases effected from registration cancelled from dealers ITC | 2021- 2022 | 132590 | 50806 | 50806 | 50806 | 366792 | ||
| 3 | ANNUAL RETURN IN FORM GSTR-9 & RECONCILIATION STATEMENT-9C NOT FILED | 2021- 2022 | 25000 | 25000 | 50,000 | ||||
| TOT AL | 932582 | 932582 | 357346 | 357346 | 25000 | 25000 | 2629856 | ||
3.1. Subsequent to the passing of the impugned order a rectification order was passed on 15.11.2024, whereby interest and penalty made in the impugned order were modified. The relevant table of the rectification order is extracted hereunder :
| Sr No | Tax rate (%) | Turn over | Tax Period | Act | POS (Place of supply) | Tax | Interest | Penalty | Fee | Others | Total | |
| From | To | |||||||||||
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 |
| 1 | 0 | 0.00 APR | 2021 | MAR 2022 | CGST | NA | 9,32,58 2.00 | 3,27,45 1.00 | 1,02,46 ,886.00 | 0.00 | 0.00 | 1,15,06,9 19.00 |
| 2 | 0 | 0.00 APR | 2021 | MAR 2022 | SGST | NA | 9,32,58 2.00 | 3,27,45 1.00 | 1,02,46 ,886.00 | 0.00 | 0.00 | 1,15,06,9 19.00 |
3.2. Thereafter, on the very same day i.e., on 15.11.2024, another rectification order was passed wherein once again tax, interest and penalty were modified. The relevant table of the rectification order is extracted hereunder :
| Sr No . | Tax rate (%) | Turn over | Tax Period | Act | POS (Place of supply) | Tax | Interest | Penalty | Fee | Others | Total | |
| From | To | |||||||||||
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 |
| 1 | 0 | 0.00 APR | 2021 | MAR 2022 | CGST | NA | 4,82,391 .00 | 82,548. 00 | 94,23,6 37.00 | 0.00 | 0.00 | 99,88,5 76.00 |
| 2 | 0 | 0.00 APR | 2021 | MAR 2022 | SGST | NA | 4,82,391 .00 | 82,548. 00 | 94,23,6 37.00 | 0.00 | 0.00 | 99,88,5 76.00 |
4. It is submitted by the learned counsel for the petitioner that neither the show cause notice nor the impugned order of assessment has been served on the petitioner by tender or sending it by RPAD, instead it had been uploaded in the "View Additional Notices and Orders" tab in GST Portal, thereby, the petitioner was unaware of the impugned order of assessment. It is also submitted by the learned counsel for the petitioner that pursuant to the passing of impugned order, recovery proceedings was also initiated. It is further submitted by the learned counsel for the petitioner that if the petitioner is provided with an opportunity, he would be able to explain the alleged discrepancies.
5. The learned counsel for
