IN
THE HIGH COURT OF JUDICATURE AT MADRAS
DATED:
27.03.2024
CORAM:
THE
HONOURABLE MR. JUSTICE SENTHILKUMAR RAMAMOORTHY
W.P.No.8153
of 2024 and W.M.P.Nos.9102, 9103 & 9105 of 2024
DSV
Air and Sea Private Limited,
Door
No.2, Chetpet, Harrington Road,
Chetpet,
Chennai, Tamil Nadu~600 031,
Represented
by its Authorised Representative,
Mr.Raghavan
T.V.N. ...Petitioner
Vs.
1.State
of Tamil Nadu,
Represented
by its Secretary,
Secretariat,
Fort St. George,
Chennai~600
009.
2.The
Deputy State Tax Officer~1,
Valluvarkottam
Assessment Circle,
Station
No.10, Palaniappa Maligai,
4th
floor, Greams Road,
Chennai~600
006.
3.Commissioner
of Commercial Taxes,
Ezhilagam,
Chepauk,
Chennai~600
005. ... Respondents
Prayer:
Writ Petition is filed under Article 226 of the Constitution of India to issue
a Writ of Certiorari calling for the records pertaining to the impugned Notice
No.33AACCD3848A1Z6/2017~2018 dated 30.09.2023 and the consequent impugned order
RFN No.MA331223222126K dated 31.12.2023 issued by 2nd respondent and quash the
same.
For Petitioner : Mr.Prasad Paranjape
for Mr.Karthik Sundaram
For Respondents : Mr.C.Harsha Raj,
Additional Govt. Pleader (T)
O
R D E R
1. An
order dated 31.12.2023 is challenged inter alia on grounds that the impugned
order travelled beyond the scope of the show cause notice and the entire trade
payables of the petitioner were subject to GST.
2. The
petitioner is a registered person under applicable GST enactments in the State
of Tamil Nadu. Pursuant to an audit and the submission of audit report dated
26.09.2023, proceedings were initiated against the petitioner by issuing a show
cause notice dated 30.09.2023. According to the petitioner, such show cause notice
was limited to the proposed tax of Rs.43,66,708.14. The petitioner replied to
such show cause notice on 30.10.2023. The impugned order was issued in the
above facts and circumstances on 31.12.2023.
3. Learned
counsel for the petitioner invited my attention to the show cause notice at
page no.137 of the paper book and contended that the aggregate tax proposed
therein was Rs.43,66,708/~. In contrast, he submits that the tax liability
confirmed under the impugned order is in excess of Rs.90 crores. By referring
to the findings of the respondents on trade payables, learned counsel submits
that the total trade payables of Rs.85,58,12,375/~ was treated as a taxable
supply and that GST was imposed thereon. He also points out that the petitioner
had replied to the show cause notice and stated that Input Tax Credit (ITC) was
availed in accordance with law by paying for supplies received from the
respective supplier within the specified 180 day period. In spite of such
reply, he submits that the respondents imposed GST on the total trade payables
and that the impugned order is vitiated on that account. Even with regard to
the imposition of GST on inward supplies on which taxes were to be paid on
reverse charge basis and ITC availed on import of services, learned counsel
contends that the impugned order contains no reasons for recording the
conclusion that the reply of the petitioner is not acceptable.
4. Mr.C.Harsha
Raj, learned Additional Government Pleader, accepts notice for the respondents.
By referring to the show cause notice, he points out that the show cause notice
set out each discrepancy and the proposed tax liability in relation thereto.
Therefore, he contends that the amount mentioned in the table at page no.137 of
the paper book cannot be treated as the amount in respect of which the
petitioner was called upon to show cause. He further submits that the
petitioner has an appellate remedy and that no case is made out for
interference under Article 226 of the Constitution of India.
5. The
focus of the petitioner-s challenge is the imposition of GST on trade payables.
It appears that the petitioner operates across India and the total trade
payables were taken by the respondents from the financial statements of the
petitioner. In the reply to the show cause notice, the petitioner had explained
that the statutory requirements with regard to availment of ITC had been
fulfilled by making payments for goods or services received by the petitioner
within the time limit specified in that regard. The petitioner also adverted to
returns filed in Form GSTR 1 and GSTR 3B in that regard.
6. In
the light of the petitioner-s response, the conclusion in the impugned order
that GST is payable on the total taxable supply as per the financial statements
of the petitioner appears prima facie to be untenable.
7. Even
with regard to the issues relating to inward supplies on which taxes were to be
paid on reverse charge basis and ITC availed on import of services, there is a
case for more detailed reconsideration.
These facts and circumstances warrant interference with the impugned
order, albeit by putting the petitioner on terms. On instructions, learned
counsel submits that the petitioner agrees to remit 10% of the disputed tax
demand as a condition for remand provided the demand in respect of trade
payables is excluded therefrom.
8. Since
it was concluded earlier that the findings with regard to imposition of GST on
trade payables by treating the total tax payables as taxable supplies is prima
facie untenable, the petitioner shall
remit 10% of the disputed tax demand pertaining to all the other heads of
demand under the impugned order as a condition for remand.
9. For
reasons set out above, the impugned order is quashed subject to the condition
that the petitioner remits 10% of the disputed tax demand under all heads,
except trade payables, within two weeks from the date of receipt of a copy of
this order. Subject to the receipt of 10% of the disputed tax demand as
indicated above, the 2nd respondent is directed to provide a reasonable
opportunity to the petitioner, including a personal hearing, and thereafter
issue a fresh order after duly considering all the petitioner-s contentions
within two months, and all contentions are left open to the petitioner.
The
writ petition is disposed of on the above terms. There will be no order as to
costs. Consequently, connected miscellaneous petitions are closed.
Disclaimer: All the Information is based on
the notification, circular and order issued by the Govt. authority and judgement delivered by the court
or the authority information is strictly for educational purposes and on the basis of our best understanding
of laws & not binding on anyone.
