Relief to The Chennai Silks, Tax Liability Determined u/s 74 of TNGST Act without considering the Reply: Madras HC sets aside Assessment Order [Read Order]

In the matter of the Chennai Silks, the Madras High Court set aside the assessment order which determined the tax liability under section 74 of the Tamil Nadu Goods and Service Tax Act, 2017(TNGST Act) without considering the reply filed. The petitioner firm is engaged in the business of trading garments and other allied items under the brand name “The Chennai Silks” in the domestic market. The respondent/Department issued an intimation in Form DRC01A concerning the ascertained tax liability under Section 74 of the Tamil Nadu Goods and Services Act, 2017 ( the Act), wherein, several alleged defects were noticed by the Department and issues were mainly concerned with the reconciliation of returns and books, ITC verification with GSTR-2A among other things. A show cause notice was issued and the personal hearing was fixed on 21.4.2023. In the said personal hearing, the respondent recorded the statement of replies. According to the petitioner, though the petitioner filed a reply and their reply was also recorded by the respondent, the impugned order came to be issued without considering the replies and passed a non-speaking order. It was stated that though they have provided the opportunity of a personal hearing and permitted the petitioner to provide the reply, the respondent must deal with the reply filed by the petitioner while passing the impugned order. However, the reply filed by the petitioner has not been taken into consideration and the respondent passed the non-speaking order. Hence, the above Writ Petition has been filed before this Court. Per contra, the respondent made a formal objection but fairly conceded that the reply filed by the petitioner had not been considered by the respondent while passing the impugned order. He further submitted that the matter may be remanded to the respondent for passing a fresh order after considering the reply filed by the petitioner. It was found that the impugned order is a non-speaking order and no doubt, the petitioner can very well challenge the same before the Appellate authority by filing an appeal under Section 107 of the Act. Under the said provision, the Appellate Authority can entertain the appeal and pass an order under Section 107(11) of the Act. Even though the petitioner has having appeal remedy before the Appellate Authority, the Appellate Authority is not conferred with the power to remand the matter to the Assessing Officer for fresh consideration. Further, the petitioner is entitled to have two occasions of the matter to be adjudicated by two Authorities, viz., the Assessing Officer and the Appellate Authority and thereby, can avail two well-considered opinions. “Due to the failure on the part of the respondent/Assessing Officer to consider the reply filed by the petitioner and deal with the same while passing the impugned order, by which, the petitioner will be deprived of their right to defend before the Assessing Authority if the matter is remanded to the Appellate Authority.”, the bench viewed. Since the reply/objections made by the petitioner under the show cause notice remained undecided, the Court comprising Justice Krishnan Ramasamy observed that the petitioner is entitled to have a considered opinion of the Assessing Officer after taking into consideration the reply filed by the petitioner. The Court set aside the impugned order and remitted the matter back for reconsideration. Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates