The Hon’ble Madras High Court in the case Tvl. Senthil Hardwares v. State Tax Officer, Pattukottai [W.P. (MD) No. 17626/2024 dated July 30, 2024] the order where a Show Cause Notice (“SCN”) was issued to the Assessee vide FORM DRC-01 and reply filed by the Assessee was accepted by the Department, but certain part of demand was confirmed vide the Order in respect of defect, which was not part of notice.
Facts:
M/s Tvl. Senthil Hardwares (“the Petitioner”) was issued a notice in FORM DRC 01 on the GST Portal on April 19, 2022, followed by a reminder for a personal hearing dated February 13, 2024 and that the personal hearing was held on April 27, 2024.
The Petitioner that on the said date, filed a detailed reply, which has also been accepted by the State Tax Officer (“the Respondent”). However, Order dated April 27, 2024 (“the Impugned Order”) served by the Respondent demanded INR 16,36,068/-.
The amount under a defect that was not part of the Impugned Notice issued to the Petitioner dated April 27, 2024, and hence the Petitioner was not made part of the reply dated April 27, 2024.
Hene, aggrieved by the circumstances, the Petitioner filed the present writ petition.
Issue:
Whether an Order can be passed beyond the defects mentioned in the SCN?
Held:
The Hon’ble Madras High Court in W.P. (MD) NO. 17626/2024 held as under
- Observed that, the Impugned Order suffers from the gross violation of the principles of natural justice as the Petitioner was not put to notice on defects. Therefore, the reasoning, which produced in conclusion of the Impugned Order, is also unsustainable.
- Held that, the Impugned Order, which stands quashed, shall be treated as corrigendum to the Impugned Notice. The Respondent was also directed to issue fresh additional addendum to the Impugned within a period of 45 days. The Petitioner shall, thereafter, file a reply to the same within a period of 30 days. The Respondent shall thereafter pass a fresh order on merits and in accordance with law as expeditiously as possible preferably within a period of two months.
Our Comments:
In a pari materia case, the Hon’ble Apex Court in the case of Commissioner of Customs, Mumbai v. Toyo Engineering India Ltd. ((2006) 7 SCC 592) held that the Department cannot travel beyond the show-cause notice.
The principles of natural justice say that the party which is penalised must be heard and given time opportunity to preset his defence which is encapsulated in the legal maxim “Audi Aultem Partem”, the judgment has upheld the principles of natural justice and protected the taxpayer from arbitrary use of power.
CLICK HERE FOR OFFICIAL JUDGMENT COPY
(Author can be reached at info@a2ztaxcorp.com)
DISCLAIMER: The views expressed are strictly of the author and A2Z Taxcorp LLP. The contents of this article are solely for informational purpose and for the reader’s personal non-commercial use. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon. Further, no portion of our article or newsletter should be used for any purpose(s) unless authorized in writing and we reserve a legal right for any infringement on usage of our article or newsletter without prior permission.
Share this content: