Madras High Court Grants Opportunity For A Fair Hearing  Due To Gst Auditor Failed To Inform About The Initiation Of Proceedings Initiated By Them.

S M J Marble & Granite Vs Assistant Commissioner

The case of S M J Marble & Granite Vs Assistant Commissioner (ST) at the Madras High Court revolves around alleged breaches of natural justice in a tax dispute. An order dated 28.12.2023 is contested, citing failure to inform proceedings by the GST auditor. This article examines the intricacies of the case and the court’s decision.

The petitioner, a dealer of marbles and granites, was subjected to an audit resulting in the issuance of a show cause notice. Central to the petitioner’s argument is the claim that their appointed GST auditor failed to inform them about the initiation of proceedings.

Consequently, they didn’t respond to the notice, leading to the issuance of the impugned order.

Learned counsel for the petitioner highlights the absence of a hearing before the order issuance, emphasizing the breach of natural justice. As a resolution, the petitioner proposes remitting 10% of the disputed tax demand.

The government pleader, on behalf of the respondent, counters, stating multiple opportunities were provided for the petitioner to respond to the audit observations and the notice.

The court’s examination reveals the petitioner’s non-participation stemmed from negligence in responding to notices. However, as the petitioner didn’t contest the tax demand on merits, the court deems it fair to provide them with an opportunity, subject to conditions.

In conclusion, the Madras High Court sets aside the impugned order and remands the matter to the respondent. The petitioner is directed to remit 10% of the disputed tax demand within a stipulated period and allowed to submit a reply to the show cause notice. The court emphasizes the importance of natural justice and provides the petitioner with an opportunity for a fair hearing. Thus, the case is disposed of with specified terms, ensuring fairness in the proceedings.

Full Text Of The Judgment/Order Of Madras High Court

An order dated 28.12.2023 is challenged on the ground that principles of natural justice were breached.

2. The petitioner is a dealer of marbles, granites and related materials. Pursuant to an audit and issuance of an audit report dated 23.09.2023, a show cause notice was issued to the petitioner on 27.09.2023. By asserting that the petitioner had appointed an auditor to handle GST compliances and such auditor had not informed the petitioner about the initiation of proceeding, it is stated that the petitioner did not reply to the show cause notice. The impugned order was issued in these facts and circumstances.

3. Learned counsel for the petitioner submits that the petitioner was not heard before the impugned order was issued. Therefore, he makes a request that an opportunity may be provided. On instructions, learned counsel for the petitioner submits that the petitioner agrees to remit 10% of the disputed tax demand as a condition for remand.

4. Mr. C. Harsha Raj, learned Additional Government Pleader, accepts notice on behalf of the respondent. He submits that the petitioner was provided multiple opportunities to respond to the audit observations and to the show cause notice.

5. On examining documents on record, it is evident that the petitioner did not participate in proceedings culminating in the impugned order. Such non-participation was on account of the petitioner’s negligence in responding to notices received. Since the petitioner did not contest the tax demand on merits, it is just and appropriate to provide the petitioner an opportunity to do so by putting the petitioner on terms.

6. Solely for the reasons set out above, the impugned order dated 2812.2023 is set aside and the matter is remanded to the respondent for reconsideration subject to the condition that the petitioner remits 10% of the disputed tax demand within two months from the date of receipt of a copy of this order. The petitioner is also permitted to submit a reply to the show cause notice within the aforesaid period. Upon receipt of the petitioner’s reply and upon being satisfied that 10% of the disputed tax demand was received, the respondent is directed to provide an opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within two months from the date of receipt of the petitioner’s reply.

7. W.P.No.9060 of 2024 is disposed of with the above terms. There shall be no order as to costs. Consequently, connected miscellaneous petitions are also closed.