Madras High Court
Tvl.Sri Durga Structurals vs The State Tax Officer/Commercial Tax ... on 5 March, 2024
Author: B.Pugalendhi
Bench: B.Pugalendhi
W.P(MD)No.5071 of 2024
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED : 05.03.2024
CORAM:
THE HONOURABLE MR.JUSTICE B.PUGALENDHI
W.P.(MD)No.5071 of 2024
and W.M.P(MD)No.4866 of 2024
Tvl.Sri Durga Structurals,
Represented by its Partner
K.Sanjai ...Petitioner
Vs.
1. The State Tax Officer/Commercial Tax Officer,
Office of the Commercial Tax Department,
Tiruverumbur Assessment Circle,
Trichy – 20
2.The Branch Manager,
State Bank of India,
SME Branch,
Thoovakudi, DP Estate,
SIDCO Industries Estate,
Tanjore Road,
Tiruchirappalli – 620 015 ...Respondents
Prayer: Writ Petition is filed under Article 226 of the Constitution
of India, seeking for the issuance of Writ of Certiorarified
Mandamus calling for the records of the impugned order in GSTIN:
33AAAFS2548D1ZM/2019-20 dated 25.07.2023 and consequential
order in DRC-07 Order under Sec.73, Ref.No.ZD330723115852J
1
https://www.mhc.tn.gov.in/judis
W.P(MD)No.5071 of 2024
dated 26.07.2023 issued by the 1st respondent and quash the same as
arbitrary and in violation of principles of natural justice and
consequently directing the 2nd respondent to defreeze the Bank
Account 31249774958 and Cash Credit No.85947794213.
For Petitioner : Mr.S.Muthuvenkatraman
For R1 : Mr.R.Suresh Kumar
Additional Government Pleader
For R2 : Mr.Pethu Rajesh
ORDER
The petitioner is a registered tax payer. The 1st respondent
has initiated proceedings as against the petitioner by issuing a Show
Cause Notice on 30.06.2023 that there was a mismatch between
GSTR-3B and GSTR-2A and a mismatch between GSTR-3B and
GSTR-7 and also conducted an enquiry and passed an order
attaching the petitioner's property, pursuant to which, the petitioner's
bank account has been frozen. Hence, the petitioner is before this
Court.
2. The learned counsel for the petitioner submits that the
Show Cause Notice and other proceedings have been communicated
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to the petitioner only through portal and he is not accustomed to the
same and therefore he did not participate in the enquiry conducted
by the 1st respondent. The learned counsel further submits that the
petitioner is having valid grounds before the 1st respondent.
However, he has failed to avail the opportunity due to his ignorance
in following the notice through portal. Now the bank account of the
petitioner has been frozen and therefore the petitioner is not in a
position to do his business and his entire business come to a stand
still.
3. The learned Additional Government Pleader takes notice
for the 1st respondent and submits that the impugned order has been
passed after providing sufficient opportunity to the petitioner and
Show Cause Notice was issued on 30.06.2023 and another
intimation notice was issued under Section 73 of TNGST Act on
01.06.2022. Personal opportunity was also provided to the
petitioner. The petitioner has not availed any of those opportunities
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and therefore, the petitioner cannot now plead he was not aware of
the notice. He would further submit that the petitioner is having an
appeal remedy as against the order impugned in this Writ Petition,
however the same was not availed in time.
4. This Court gave its anxious consideration to the rival
submissions made and perused the materials available on record.
5. The 1st respondent has noticed certain discrepancies
between GSTR-3B and GSTR-7 and mismatch between GSTR-3B
and GSTR-7 for the year 2019-2020. An ASMT-10 order was
passed on 28.03.2022 and an intimation under Section 73 of the Act
was issued on 01.06.2022. The Show Cause Notice was issued to the
petitioner on 30.06.2023 and was also provided personal hearing as
required under Section 75(5) of the Act. Admittedly the Show Cause
Notice and other communication were made only through portal.
Section 169 (D) enables the 1st respondent to issue notice through
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their portal. However, most of the traders are not equipped in
following these notice through portal. By engaging an Auditor or an
Accountant the returns are filed. Section 169 of the Act prescribe
other mode of services to the tax payers. However, the 1st respondent
is opting service of notice only through portal.
6. This Court in Suguna Cutpiece v. Appellate Deputy
Commissioner (ST)(GST) and Others, reported in 2022 (2) TMI 933,
has held that no useful purpose would be served keeping the petitioners
out of the Goods and Service Tax regime, as such assessees would still
continue to his businesses and supply goods and services and the relevant
paragraphs are extracted as under:
“216. Since no useful will be served by not
allowing persons like the petitioners to revive their
registration and integrate them back into the main stream, I
am of the view that the impugned orders are liable to be
quashed and with few safeguards.
217. There are adequate safeguards under the GST
enactments which can also be pressed against these
petitioners even if their registration are revived so that, there
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is no abuse by these petitioners and there is enough
deterrence against default in either paying tax or in
complying with the procedures of filing returns.
218. Further, the Government requires tax to meet
its expenditure. By not bringing these petitioners within the
GST fold, unintended privilege may be conferred on these
petitioners unfairly to not to pay GST should they end
supplying goods and/or services without registration. For
example, a person renting out an immovable property will
continue to batch supply such service irrespective of
registration or not.
219. Therefore, if such a person is not allowed to
revive the registration, the GST will not be paid, unless of
course, the recipient is liable to pay tax on reverse charge
basis. Otherwise, also there will be no payment of value
added tax. The ultimate goal under the GST regime will
stand defeated. Therefore, these petitioners deserve a right to
come back into the GST fold and carry on their trade and
business in a legitimate manner.
220. The provisions of the GST Enactments and
the Rules made there under read with various clarifications
issued by the Central Government pursuant to the decision
of the GST Council and the Notification issued thereunder
the respective enactments also make it clear, intention is to
only facilitate and not to debar and de-recognised assesses
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from coming back into the GST fold.
221. While exercising jurisdiction, under Article
226 of the Constitution, the powers of the Court to do justice
i.e., what is good for the society, can neither be restricted nor
curtailed. This power under Article 226 can be exercised to
effectuate the rule of law.
222. Therefore, power of this Court under Article
226 of the Constitution of India is being exercised cautiously
in favour of the petitioners as this power is conceived to
serve the ends of law and not to transgress them.
223. In Mafatlal Industries Ltd. Vs. Union of India, (1997) 5
SCC 536, in Paragraph No.77, the Hon’ble Supreme Court
observed that “So far as the jurisdiction of the High Court
under Article 226 — or for that matter, the jurisdiction of
this Court under Article 32 — is concerned, it is obvious that
the provisions of the Act cannot bar and curtail these
remedies. It is, however, equally obvious that while
exercising the power under Article 226/Article 32, the Court
would certainly take note of the legislative intent manifested
in the provisions of the Act and would exercise their
jurisdiction consistent with the provisions of the enactment.
Even while acting in exercise of the said constitutional
power, the High Court cannot ignore the law nor can it
override it.
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224. Notwithstanding the fact that the petitioners
have shown utter disregard to the provisions of the Acts and
have failed to take advantage of the amnesty scheme given
to revive their registration, this Court is inclined to quash the
impugned orders with grant consequential reliefs subject to
terms.
225. The provisions of the GST enactments cannot
be interpreted so as to deny the right to carry on Trade and
Commerce to a citizen and subjects. The constitutional
guarantee is unconditional and unequivocal and must be
enforced regardless of the defect in the scheme of the GST
enactments. The right to carry on trade or profession also
cannot be curtailed. Only reasonable restriction can be
imposed. To deny such rights would militate against their
rights under Article 14, read with Article 19 (1)(g) and
Article 21 of the Constitution of India.
226. As original or as appellate authority
exercising power under the respective enactments, quasi
judicial officers were bound by the provisions of the Act and
the limitation under it, they have acted in accordance with
law. They cannot look beyond the limitations prescribed
under provisions of the Act. Therefore, no fault can be
attributed to their action.
227. This is a fit case for exercising the power
under Article 226 of the Constitution of India in favour of
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the petitioners by quashing the impugned orders and to grant
consequential relief to the petitioners. By doing so, the Court
is effectuating the object under the GST enactment of
levying and collecting just tax from every assessee who
either supplies goods or service. Legitimate Trade and
Commerce by every supplier should be allowed to be carried
on subject to payment of tax and statutory compliance.
Therefore, the impugned orders deserve to be quashed.
228. These petitioners deserve a chance and
therefore should be allowed to revive their registration so
that they can proceed to regularize the defaults. The
authorities acting under the Act may impose penalty with the
gravity of lapses committed by these petitioners by issuing
notice. If required, the Central Government and the State
Government may also suitably amend the Rules to levy
penalty so that it acts as a deterrent on others from adopting
casual approach. In the light of the above discussion, these
Writ Petitions are allowed subject to the following
conditions:-
i. The petitioners are directed to file their returns for the
period prior to the cancellation of registration, if such returns
have not been already filed, together with tax defaulted
which has not been paid prior to cancellation along with
interest for such belated payment of tax and fine and fee
fixed for belated filing of returns for the defaulted period
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under the provisions of the Act, within a period of forty five
(45) days from the date of receipt of a copy of this order, if it
has not been already paid.
ii. It is made clear that such payment of Tax, Interest, fine /
fee and etc. shall not be allowed to be made or adjusted from
and out of any Input Tax Credit which may be lying
unutilized or unclaimed in the hands of these petitioners.
iii. If any Input Tax Credit has remained utilized, it shall not
be utilised until it is scrutinized and approved by an
appropriate or a competent officer of the Department.
iv. Only such approved Input Tax Credit shall be allowed for
being utilized thereafter for discharging future tax liability
under the Act and Rule.
v. The petitioners shall also pay GST and file the returns for
the period subsequent to the cancellation of the registration
by declaring the correct value of supplies and payment of
GST shall also be in cash.
vi. If any Input Tax Credit was earned, it shall be allowed to
be utilised only after scrutinising and approving by the
respondents or any other competent authority.
vii. The respondents may also impose such restrictions /
limitation on petitioners as may be warranted to ensure that
there is no undue passing of Input Tax Credit pending such
exercise and to ensure that there is no violation or an attempt
to do bill trading by taking advantage of this order.
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viii. On payment of tax, penalty and uploading of returns, the
registration shall stand revived forthwith.
ix. The respondents shall take suitable steps by instructing
GST Network, New Delhi to make suitable changes in the
architecture of the GST Web portal to allow these petitioners
to file their returns and to pay the tax/penalty/fine.
x. The above exercise shall be carried out by the respondents
within a period of thirty (30) days from the date of receipt of
a copy of this order.
xi. No cost.
xii. Consequently, connected Miscellaneous Petitions are
closed.”
7. Relying on the aforesaid judgment, this Court in
W.P(MD)No.857 of 2024 has observed as follows:
“10. The petitioner in this case is engaged in the business of
executing contract works for Government and its agencies.
Most of the small scale entrepreneurs like carpenters,
electricians, fabricators, etc., are almost uneducated and they
are not accustomed with handling of e-mails and other
advance technologies. Though they are providing e-mail IDs
at the time of Registration, the applications are prepared by
some agents by creating e-mail IDs, however, on reality most
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of the Traders are not accustomed with handling of e-mails.
They are also not aware about the consequences of not filing
the Returns in Time. The Department shall workout the
possibilities of issuing these notices in the respective regional
languages and also by SMS and registered post. So that, the
uneducated traders can also respond to these notices to some
extent, otherwise, these notices will be an empty formality
and will not serve any purpose for which it has been issued”.
8. Opportunity of hearing is a basic requirement before
passing any adverse order. In the present case, admittedly, the
petitioner has not availed that opportunity of personal hearing
provided through portal.
9. Since the petitioner has made out a prima facie case, this
Court is inclined to entertain this Writ Petition and grant an order of
interim stay.The learned Additional Government Pleader submits
that instead of granting an interim order,the petitioner can be
provided one more opportunity and the date can be fixed by this
Court.
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10. In view of the aforesaid orders cited supra and for the
sole purpose to provide an opportunity of personal hearing to the
petitioner, this Court is inclined to set aside the impugned order.
Accordingly, the same is set aside.
11. The petitioner, without expecting any further notice
from the 1st respondent, shall appear before the 1st respondent on
27.03.2024 and shall provide his explanation, if any. The 1st
respondent shall consider the same and pass a fresh order.
12. In fine, this Writ Petition is allowed. No costs.
Consequently, connected miscellaneous petition is closed.
05.03.2024
Index : Yes / No
NCC : Yes / No
CM
Note:Issue order copy on 26.03.2024.
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To,
1. The State Tax Officer/Commercial Tax Officer,
Office of the Commercial Tax Department,
Tiruverumbur Assessment Circle,
Trichy – 20
2.The Branch Manager,
State Bank of India,
SME Branch,
Thoovakudi, DP Estate,
SIDCO Industries Estate,
Tanjore Road,
Tiruchirappalli – 620 015
https://www.mhc.tn.gov.in/judis
B.PUGALENDHI, J.
CM
05.03.2024
https://www.mhc.tn.gov.in/judis
