M/S. SREE MANOJ INTERNATIONAL v. THE DEPUTY STATE TAX OFFICER

Factual and Procedural Background

The petitioner, M/s. Sree Manoj International, challenged an order dated 01.03.2024 passed by the Deputy State Tax Officer, Tiruppur North -2 Assessment Circle. The order related to a tax proposal confirming a demand based on an alleged discrepancy between the petitioner's GSTR 3B returns and the auto-populated GSTR 2A. The petitioner claimed to be unaware of the proceedings as notices and the order were uploaded only on the GST portal without any other mode of communication. Consequently, the petitioner filed this writ petition under Article 226 of the Constitution of India praying for quashing the impugned order on grounds of violation of the CGST Act, 2017, the TNGST Act, 2017, and principles of natural justice.

Legal Issues Presented

1. Whether the impugned order dated 01.03.2024 was passed in violation of the principles of natural justice due to inadequate communication to the petitioner.
2. Whether the tax demand confirmed on account of discrepancy between GSTR 3B returns and GSTR 2A was justified without considering the petitioner’s explanation regarding the IGST component on imports.
3. Whether the petitioner should be granted an opportunity to respond to the show cause notice and the matter reconsidered.

Arguments of the Parties

Petitioner’s Arguments

• The petitioner was unaware of the proceedings as notices and orders were only uploaded on the GST portal and not communicated by any other means.
• The tax proposal arose from an alleged discrepancy between the petitioner’s GSTR 3B returns and the auto-populated GSTR 2A, specifically regarding the IGST paid on imports, which was reflected in GSTR 2A but ignored in the assessment.
• The petitioner requested an opportunity to explain the discrepancy to the satisfaction of the respondent.
• The petitioner agreed to remit 10% of the disputed tax demand as a condition for remand of the matter.

Respondent’s Arguments

• The impugned order was preceded by adequate procedural steps including an intimation, a show cause notice, and three reminders for personal hearings.
• The tax liability was confirmed because the petitioner failed to respond to the show cause notice.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The court examined the impugned order and noted that the tax demand was confirmed due to the petitioner’s failure to respond to the show cause notice concerning the discrepancy between GSTR 3B and GSTR 2A returns. The petitioner contended that the IGST paid on imports, reflected in GSTR 2A, was not considered, and requested an opportunity to clarify. The court found merit in the petitioner’s contention that the matter requires reconsideration, provided that procedural fairness is observed. Although the respondent argued that notices and reminders were issued, the petitioner’s claim of lack of actual communication was accepted as a ground for reconsideration. Therefore, the court set aside the impugned order on condition that the petitioner remit 10% of the disputed tax demand within two weeks and submit a reply to the show cause notice. Upon compliance, the respondent was directed to provide a reasonable opportunity for personal hearing and pass a fresh order within three months from receipt of the petitioner’s reply.

Holding and Implications

DISPOSED OF

The writ petition was disposed of on the terms that the petitioner must remit 10% of the disputed tax demand and submit a reply to the show cause notice within two weeks. The respondent is then directed to reconsider the matter, provide a personal hearing, and pass a fresh order within three months. This decision directly affects the parties by setting aside the impugned order and mandating reconsideration with procedural fairness. No new legal precedent was established by this order.