Madras High Court Allows GST Appeal After Consultant’s Inadequate Response Fails to Defend Taxpayer

The Madras High Court, in a ruling, permitted a taxpayer to challenge a Goods and Services Tax demand order, which was validated on the grounds that the GST consultant had losses in furnishing an appropriate response with proof.

M/s.Star Brand Enterprises, the applicant who is a trader in cashew kernels, raisins, and toor dal, had contested the impugned order on 20.03.2024, passed via the GST authority establishing a demand of Rs 69,62,780, including interest and penalty. Through a show cause notice issued on 15.12.2023, the demand was raised.

Applicant, on getting SCN, has engaged with a GST consultant who attended the personal hearing dated 05.03.2024 and asked for time to file a detailed response.

The consultant, rather than filing a complete reply with the related documents, furnished a brief and cryptic response, only denying the allegations. The same has been directed to the confirmation of the demand via the department.

Read Also: Madras High Court Orders Fresh Consideration After 25% Pre-Deposit from GST Cash Ledger

After seeing the problems of the applicant, the business was transferred to a new location, and the impugned order was delivered to the earlier registered business address. Consequently, the applicant stayed clueless about the order and merely came to learn about the same after the expiry of the appeal period in August 2024. Therefore, he was not able to submit a plea within the said duration.

The applicant before the Madras High Court shows a willingness to deposit 25% of the deposit tax and asks for a chance to submit a reply with the required proof and to be heard afresh.

The tax department’s senior standing counsel does not counter the request and leaves it to the discretion of the court.

As per that, Justice Krishnan Ramasamy said that a delay was made in response to SCN, the applicant has furnished an explanation for the delay, and appeared interested in challenging the demand.

The court then provided a chance to the applicant to present its case while setting aside the impugned order under the particular conditions.

Within four weeks, the petitioner is to deposit 25% of the disputed tax amount, followed by filing a reply along with relevant documents within two weeks, the court said. Respondent should furnish a 14-day notice for the personal hearing, and after that, pass the precise orders based on the merits.