The Hon'ble High Court of Madras in K.A. & Co. v. State Tax Officer [ W.P.NO. 10128 OF 2024 APRIL 17, 2024] held that the impugned assessment order passed by the State Tax Officer is set aside as it was based on the financial statement of the subsequent year (2018-19) instead of the relevant year (2017-18). The matter was remanded for fresh consideration.
Facts of the Case:
The Petitioner, K.A. & Co., challenged the assessment order dated December 29, 2023, passed by the State Tax Officer (the Respondent). The Petitioner alleged that the assessment was made based on the financial statement of the subsequent year (2018-19) instead of the relevant year (2017-18), resulting in a higher taxable turnover. Consequently, the taxable turnover was taken as Rs. 8,95,91,806/- instead of Rs. 2,65,31,910/-.
The Petitioner further alleged a breach of the principles of natural justice, stating that the show cause notice (SCN) dated September 28, 2023, was uploaded on the "View Additional Notices and Orders" tab on the GST portal and not communicated through any other mode. As a result, the Petitioner did not reply to the SCN.
The Respondent contended that the Petitioner admitted liability and discharged dues in respect of two out of the six issues specified in the intimation dated September 14, 2023. Therefore, the Respondent argued that the Petitioner was aware of the proceedings but opted not to reply to the SCN or participate in the proceedings pursuant thereto.
Issue:
Whether the impugned assessment order passed by the State Tax Officer is valid when it was based on the financial statement of the subsequent year instead of the relevant year?
Held by the Court:
The Hon'ble Madras High Court in W.P.NO. 10128 OF 2024 held as under
The Hon'ble Madras High Court observed that while undertaking adjudication for the assessment period 2017-18, it was incumbent on the Respondent to examine the financial statement for the year ended March 31, 2018, and not use the financial statement for the year ended March 31, 2019, as the basis.
The Court found that the Petitioner's justification for not responding to the SCN was not convincing, as the Petitioner, being a registered person, is under an obligation to monitor the GST portal on an ongoing basis.
The Court set aside the impugned order dated December 29, 2023, on the condition that the Petitioner remits a sum of Rs. 10,00,000/- (Rupees Ten lakhs only) towards the disputed tax demand within three weeks from the date of receipt of the order copy.
The Petitioner was permitted to submit a reply to the SCN within the aforesaid period.
Upon receipt of the Petitioner's reply and satisfaction of the payment of Rs. 10,00,000/-, the Respondent was directed to provide a reasonable opportunity to the Petitioner, including a personal hearing, and thereafter issue a fresh order within three months from the date of receipt of the Petitioner's reply.
Relevant Sections:
"Section 73 of Central Goods and Services Tax Act, 2017/ Tamil Nadu Goods and Services Tax Act, 2017"
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