Procandour Automotive Systems Private Ltd. vs. Commercial/State Tax
Officer
1.Case Details
Name of the Party:
Procandour Automotive Systems Private Ltd.
Case No.: W.P. No.12117 of 2024
Date of Order: 18.03.2025
Court Name: High Court of Judicature at Madras
Presiding Judge: Hon'ble Mr. Justice Mohammed Shaffiq
2. Summary of the Case
This case involves a
dispute regarding the issuance of a demand order under Section 73 of the Tamil
Nadu Goods and Services Tax (TNGST) Act, 2017. The petitioner challenged the
impugned order on the ground that their objections in response to the show cause
notice (SCN) were not considered. The Madras High Court found merit in the
petitioner’s claims and directed the tax authorities to re-do the assessment
after considering the petitioner’s objections and providing a reasonable
opportunity for a hearing.
3. Facts of the Case
Procandour Automotive
Systems Private Ltd. is a GST-registered entity engaged in manufacturing
weighing machinery and accessories. The company filed its GST returns for the
financial year 2017-18 and paid the necessary taxes.
The tax authorities
conducted an audit under Section 65 of the TNGST Act and observed certain
discrepancies in the petitioner’s Input Tax Credit (ITC) claims, tax payments,
and various expenses. Based on these observations, a show cause notice (SCN) in
Form DRC-01 was issued on 28.09.2023.
The petitioner responded
with multiple objections, submitted on 28.10.2023, 21.11.2023, 29.11.2023, and
18.12.2023, arguing that the ITC claims were legitimate and that the audit
findings were based on incorrect assumptions. However, despite these responses,
the authorities proceeded with the assessment and issued a demand order in Form
GST DRC-07 on 30.12.2023 without granting a personal hearing.
4. Submissions by the
Petitioner
The petitioner,
represented by Mr. N.V. Balaji, argued that:
- The tax demand order was passed
without considering the objections submitted in response to the SCN.
- The assessment order suffered from
non-application of mind since it did not mention or discuss the replies
submitted by the petitioner.
- The authorities failed to provide a
personal hearing, violating the principles of natural justice.
- Several ITC-related discrepancies
pointed out in the audit had already been dropped in the previous
financial years, yet they were raised again for FY 2017-18.
- The assessment order should be set
aside, and the matter should be reconsidered after a proper hearing.
5. Submissions by the
Respondent
The respondents,
represented by Mr. C. Harsha Raj, Additional Government Pleader, countered
that:
- The assessment was conducted based on
the audit findings.
- However, the department had no
objection if the court deemed it necessary to reconsider the objections
submitted by the petitioner.
- The authorities were willing to re-do
the assessment if directed by the court.
6. Findings and Judgment
of the Court
Upon reviewing the
submissions, the court made the following observations:
- The impugned order did not refer to
or discuss any of the objections submitted by the petitioner.
- Failure to consider objections
amounted to non-application of mind, rendering the assessment order
legally unsustainable.
- Denying the petitioner a personal
hearing was a clear violation of the principles of natural justice.
Judgment:
The court directed the respondent to:
- Re-do the assessment, considering all
objections raised by the petitioner.
- Provide the petitioner with a
reasonable opportunity for a personal hearing before passing a fresh
order.
The writ petition was
accordingly disposed of, and the connected miscellaneous petitions were closed.
7. Conclusion
This case highlights the
necessity of following due process and ensuring that tax authorities consider
all objections before passing an assessment order. The court's decision
reinforces the principle that non-application of mind and denial of a hearing violate
natural justice. By directing the tax authorities to reconsider the assessment,
the judgment upholds the rights of taxpayers and ensures fairness in GST
compliance.
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.
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