Not Responding GSTR-3A Triggers Action u/s 62: Madras HC Allows Contesting the Penalty with a Partial Deposit

The failure to reply to the GSTR-3A triggered the GST proceedings u/s 62 of the GST Act, 2017, where the Madras High Court granted a chance contest on a 10% pre-deposit condition.

The taxpayer, Tvl.SMA TEX filed a writ petition against the GST order. It was argued that a notice for cancellation of the GST registration was received dated 21.01.2019 and that such registration was cancelled dated 27.02.2019.

Towards the GST registration cancellation, it was claimed by the taxpayer that he was not learned of the proceedings culminating in the impugned assessment order u/s 62 until there is an execution of distraint proceedings.

The Section 62 proceedings are started when the GST payer fails to file the GST returns within the specified time limit even after service of notice u/s 46 of the GST regulation.

It was claimed by the applicant’s counsel that because of the losses in the business, the cancellation of registration took place. He claimed that the applicant was not able to take part in the proceedings directing to the disputed order. It was claimed to make a pre-deposit of 10%.

The counsel of the GST department mentioned that the principles of natural justice were carried out via issuing a notice on 5th January 2023, in Form GSTR 3A. It was claimed on the failure of the applicant to file the returns after obtaining the notice, the assessing officer was compelled to assess the case on the grounds of the effective judgment u/s 62 of the GST statutes.

It was regarded by the court that the assessment was made on the effective ruling as the applicant’s losses to answer to the notice in Form GSTR 3A. However, acknowledging the affidavit filed with the petition, the bench remarked that the GST registration was cancelled, and was not able to perform his business because of issues related to finance.

Consequently, the High Court bench of Justice Senthilkumar Ramamoorthy, in the interest of justice determined to furnish a chance to the taxpayer to challenge the GST demand on a 10% predeposit condition. The order was set aside and asked the GST department to provide a personal hearing chance.

Read Also: A Guide to Assessment U/S 62 for Non-Filers GST Returns

For the taxpayer, Mr.C.Prabakaran has appeared and for the respondent Mr. T.N.C. Kaushik, AGP (T) has appeared.