HC grants opportunity for reply to SCN as Assessee being small businessman was not aware of the proceedings initiated

[CA Bimal Jain]

The Hon’ble Madras High Court in the case of TVL. TIRUPATHI PACKAGING, REPRESENTED BY ITS PROPRIETOR, R. VENKATESH KANNAN VERSUS THE DEPUTY STATE TAX OFFICER-2, MADURAI. - 2024 (7) TMI 600 - MADRAS HIGH COURT, granted the Assessee a fresh opportunity to file reply to the Show Cause Notice (“the SCN”) in case where the Assessee could not provide proper explanation to discrepancy raised as the Assessee was not aware of the proceedings initiated subject to the condition that the Assessee deposits 10% of the disputed tax amount confirmed in the assessment order.

Facts:

M/s. Tvl. Tripathi Packaging (“the Petitioner”), filed a writ petition against order dated December 26, 2023 (“the Impugned Order”) passed by the State Tax Officer (“the Respondent”), which demanded tax and Interest. The Petitioner contended that the Input Tax Credit was wrongly claimed as Reverse Charge Mechanism in Form GSTR-3B instead of under Table 4A (5) due to errors made in the initial months after the implementation of GST. Thereafter, the Petitioner contended that being small enterprise, they were not aware of the SCN and personal hearing notice issued and therefore, be granted an opportunity to provide explanation regarding the discrepancy raised.

Held:

The Hon’ble Madras High Court in TVL. TIRUPATHI PACKAGING, REPRESENTED BY ITS PROPRIETOR, R. VENKATESH KANNAN VERSUS THE DEPUTY STATE TAX OFFICER-2, MADURAI. - 2024 (7) TMI 600 - MADRAS HIGH COURT, held as under:

• Opined that, the Petitioner should be given an adequate opportunity to reply to the SCN in DRC-01 and submit supporting documents regarding the erroneous claim of ITC.
• Held that, the Impugned Order was quashed, and the Respondent was directed to issue a fresh order after the Petitioner deposited 10% of the disputed tax amount, thereby disposing the writ petition.

Our Comments:

It is pertinent to note that the Hon’ble Madras High Court in the case of ABISHEK SUPPLIERS, REPRESENTED BY ITS PROPRIETRIX, MRS. PRAVEENA RAJESH VERSUS THE COMMERCIAL TAX OFFICER, CHENNAI - 2024 (7) TMI 99 - MADRAS HIGH COURT allowed the writ petition and held that the Assessment Order passed solely based on the fact that the taxpayer failed to file the reply is not tenable, and thereby, the opportunity should be granted to the Assessee to contest the tax demand on merits.

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