Madras HC Throws Out GST Demand Over Separate Tamil Nadu Branch’s BAL Sheet & P&L Accounts

The Madras High Court in a ruling quashed the GST DRC-07 order which confirmed the taxpayer’s demand as the taxpayer losses to provide a separate balance sheet and profit and loss account for the Tamil Nadu Branch. The council does not acknowledge the reply of the applicant, the bench noted.

The applicant, Tokyo Zairyo (India) Private Limited contested the assessment order on 29.12.2023 based on violating the response of the applicant. The petitioner, in reply to an audit conducted u/s 65 of applicable GST enactments, had given a response to the audit report dated 28.11.2023. But on 29.12.2023 the impugned order was issued beyond due regard of the same reply.

At the time of legal proceedings, the applicant’s counsel shows that the point that the answer furnished was labelled as unauthorized and does not acknowledge consequently, only as the applicant was not able to attend the scheduled personal hearing.

Representing the respondents Mr. T.N.C. Kaushik, an Additional Government Pleader stated that the failure of the applicant to produce a separate balance sheet and profit & loss account for the Tamil Nadu branch directed to the confirmation of the tax demand.

On the analysis of the impugned order, a single bench of Senthilkumar Ramamoorthy cited that the same would become apparent that identical findings dismissing the reply of the applicant were recorded in distinct audit observations. For example in addressing an audit observation for the turnover reconciliation, the order quoted that the reply of the applicant was rejected as unauthorized because of their absence at the personal hearing, with the conclusion of the Audit Officer being upheld.

The court noted that the same rationale to overlook the response of the applicant is not satisfactory. The same is considered that the order is flawed because it fails to regard the reply of the applicant. On 29.12.2023 the court set aside the impugned order and remanded the case for reconsideration.

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The court asked the respondent to provide a reasonable chance to the applicant along with the personal hearing and to provide a new order within 2 months from the receipt date of the decision of the court. Towards the course of the remanded proceedings, all the contentions were left open for the applicant.

Without any costs, the writ petition was disposed of with the related miscellaneous petitions being closed.