Madras HC Rules Against GST Liability Order in Dispute Over INR 5 Lakh Tax Payment

The matter of Sri Rajaa Store vs State Tax Officer came before the Madras High Court regarding an assessment order on 29th December 2023. The order was contested by the petitioner stating a violation of natural justice principles.

The applicant is a business functioning on slim margins and argued that their whole tax liability was offset by the Input Tax Credit (ITC). Upon obtaining an SCN in September 2023, they answered in October, emphasizing that their outward supplies do not generate tax obligation post-adjusting Input tax credit. Because of unexpected cases like cyclone Michaung, they are not able to attend the hearing scheduled for December 13, 2023.

The case is related to the absence of the annexed documents with the response of the applicant. Even after citing their intention to provide the related documents the whole ITC claimed by the applicant was re-versed directing to an influential tax obligation.

The court considers the claim of the applicant regarding the availability of proper documentation and the non-generation of tax liability from outward supplies.

The assessment order has been set aside by the Madras High Court as per the state that the applicant remits Rs 5,00,000 for the disputed tax obligation within 3 weeks and provides the other documents that sustain their response within the said duration.

Read Also: Madras High Court: Deemed Reconciling the Differences in GSTR 3B and GSTR 2A/2B for ITC claim

On receipt and verification of such documents and the cited sum, the respondent was rendered to furnish a reasonable chance for the applicant to show their matter, followed by the issuance of the new order in 2 months.