• Dated 09^th September, 2024

The Matter Should Be Remanded When the Demand Was Confirmed Solely on the Grounds That the Assessee Did Not Reply to the Show Cause Notice:

The Hon'ble High Court of Judicature at Madras, in a recent judgment, held that when a tax proposal regarding a mismatch between the assessee's GSTR 3B returns and the auto-populated GSTR 2A was confirmed solely because the assessee did not reply to the show cause notice and a sum was appropriated from the assessee's bank account (representing more than 10% of the disputed tax demand), the original order should be set aside and the matter should be remanded for reconsideration.

Background of the case:

The petitioner asserts that two parallel proceedings were initiated for the same assessment period following a scrutiny of returns. Due to the confusion caused by the initiation of such proceedings, the petitioner was unable to participate in them and could not file a reply within the due date. Thus, the order in original dated 26-12-2023 is challenged in this writ petition on the grounds that two parallel proceedings were initiated for the same assessment period.

Court's Decision:

Upon reviewing the impugned order, the Hon'ble High Court of Judicature at Madras found that the tax proposal related to a mismatch between the petitioner's GSTR 3B returns and the auto-populated GSTR 2A, was confirmed solely because the taxpayer did not reply to the show cause notice within stipulated period. It is undisputed that a sum of Rs. 3,17,300/- was appropriated from the petitioner's bank account, representing more than 10% of the disputed tax demand in relation to the assessments under this writ petition. Under such circumstances, reconsideration is necessary. Therefore, the impugned order dated 26-12-2023 is set aside and the matter is remanded for reconsideration.

Our Comments:

The Court rightly emphasized due process by setting aside the order confirmed solely due to non-response to the show cause notice. The remand order allows the assessee to present their case, ensuring fairness, especially when the principle of natural justice was violated by appropriating a significant amount representing more than 10% of the disputed amount from petitioner's bank account.

Prepared by, Tanima Ghosh;
Reviewed by Jaidip Basu.

1. Fazil Trader @ Farook v. Deputy State Tax Officer/Deputy Commercial Tax Officer, [W.P. No. 18428 of 2024 and W.M.P. Nos. 20231 & 20232 of 2024, decided on 24-7-2024]