Madras HC Allows Contesting GST Liability with a 10% Pre-deposit on Non-response to SCN

GST obligation due to non-response to SCN: HC furnishes the opportunity to challenge tax demand on merits with a 10% pre-deposit

The Madras HC in a ruling addressed a significant matter by engaging Yesem Marketing and the Deputy Commercial Tax Officer concerning Goods and Services Tax (GST) liability. Based on the allegation of the violation of natural justice as to the inability of the applicant to answer to the SCN the decision of the court was pointed.

Case Background

On 17th October 2023, Yesem Marketing contested the order which carried a tax recommendation against them. It was contended by the applicant that personal issues averted them from answering to Show Cause Notice (SCN), subsequently refusing them a fair chance to contest the tax demand on its merits. The major contention was that the tax obligation was established just on the difference between GSTR 1 statements and GSTR 3B returns.

Legal Arguments by Judge

A breach of natural justice, stressing that legal rules were violated as the proceedings were executed without effective verification and exclusively on the mismatch grounds, the applicant contended. They also argued that by providing a chance they could show that the proposal of tax was baseless and needed to be dropped. As a condition for remand, the applicant agreed to pre-deposit 10% of the disputed tax amount.

The issuance of the SCN and the following reminders as per procedural needs have been emphasized by the Government advocate who is representing the respondent. It was stated that Rule 88C of the Central Goods and Services Tax Rules, 2017, quoted by the applicant, did not apply to assessments for the pertinent period.

Final Decision From Madras High Court

The Madras High Court on analyzing the facts and arguments discovered the merit in the appeal of the applicant for the refusal of the enough chance to present their matter. The court set aside the impugned order and remanded the case back to the Deputy Commercial Tax Officer. The remand was dependent on the applicant remitting 10% of the disputed tax amount within 2 weeks and proposing a detailed reply to the SCN.

The court asked the tax council to furnish a reasonable chance to the applicant along with a personal hearing and to furnish a fresh order within 3 months from the receipt of the response of the applicant. The same decision shows the necessity of procedural fairness and compliance with the principles of natural justice in the proceedings of tax assessment.

Closure: The matter of Yesem Marketing vs. Deputy Commercial Tax Officer before the Madras High Court functions as an influential precedent highlighting the taxpayer’s rights to fair and just treatment in tax assessments.

The judgment of the court revamped procedural lapses and confirmed that the applicant had a genuine chance to challenge the tax obligation levied because of non-response to the SCN. The very ruling reaffirms the role of the judiciary in protecting the interests of taxpayers and keeping the rule of law in GST matters.