In W.P. No.2170 of 2023-MAD HC- Notice has simply extracted ingredients of Sec.74 of Tamil Nadu GST Act but same does not disclose details of violations: Madras HC quashes order where petitioner was levied with penalty for claiming ITC based on bogus tax invoices
Justice Abdul Quddhose [27-01-2023]

Read Order: M/S.HIND ALUMINIUM COMPANY V. THE ASSISTANT COMMISSIONER (ST) HOSUR (NORTH - I) ASSESSMENT CIRCLE AND ORS 

Mansimran Kaur

Chennai, February 3, 2023: In a case where the petitioner had been levied with penalty for claiming input tax credit based on bogus tax invoices / debit notes , the Madras High Court has quashed an order passed u/s 74 of Tamil Nadu GST Act as it had been passed by total non application of mind to the petitioner’s reply.

While disposing of the instant petition instituted by the  petitioner  assailing the impugned order passed under Section 74 of the Tamil Nadu Goods and Services Tax Act, 2017, Justice Abdul Quddhose held that the grounds raised by the petitioner stating that the petitioner was not granted sufficient opportunity to send the reply to the show cause notice, was to be accepted. 

The petitioner assailed the impugned order dated January 4, 2023 passed under Section 74 of the Tamil Nadu Goods and Services Tax Act, 2017 on the ground  the impugned order has been passed on was total non application of mind to the reply sent by the petitioner and the show cause notice was  dated November 22, 2022 but the petitioner was directed to give a reply to the same by November 23, 2022. 

The petitioner had also sent a reply on requesting the respondents to grant further time to submit his detailed reply on the ground that the time given was too short. It was contended that the reply  submitted by the petitioner was not considered by the respondents under the impugned order and the show cause notice issued by the respondent was  bald and cryptic. It did  not inform the petitioner about the details of the violations committed by them as per the provisions of Section 74 of the TNGST Act, 2017, instead the respondent simply extracted the ingredients of Section 74 of the Act and  issued the show cause notice.

Under the impugned order passed under Section 74 of the TNGST Act, 2017, the petitioner was levied with penalty for claiming input tax credit based on bogus tax invoices / debit notes.

This Court was of the considered view that the grounds raised by the petitioner stating that the petitioner was not granted sufficient opportunity to send the reply to the show cause notice, needed to be accepted. 

 On a prima facie consideration, the show cause notice sent to the petitioner by the respondents was also bald and cryptic and the exact details of the violations committed by the petitioner were not disclosed in the said show cause notice. 

The show cause notice simply extracted the ingredients of Section 74 of the Act but the same did not disclose the details of the violations committed by the petitioner, the Bench held.

For such reasons, the Court was of the considered view that the impugned order  was passed by total non application of mind to the reply submitted by the petitioner and therefore, the impugned order needed to be necessarily quashed and the matter to be remanded back to the respondents for fresh consideration on merits and in accordance with law after affording a fair hearing to the petitioner, including granting them the right of personal hearing.

In view of the observations stated above, the impugned order was set aside and the petition was disposed of accordingly.