Fresh SCN Was to Be Issued to Assessee if GST Authority Intended to Modify Tax Proposal | HC

Case Details: Vela Agencies v. Assistant Commissioner, State Tax - [2024] 162 taxmann.com 419 (Madras)

Judiciary and Counsel Details

• Senthilkumar Ramamoorthy, J.
• N. Murali for the Petitioner.
• V. Prashanth Kiran, GA (T) for the Respondent.

Facts of the Case

The petitioner received intimation dated 24.11.2022 and notice dated 29.12.2022 to show cause why tax liability should not be imposed with regard to sales suppression. The petitioner replied to the intimation on 28.12.2022 by stating that the petitioner was a distributor of Aircel Limited and was unable to conduct business after 28.02.2018 due to the closure of the business of Aircel.

However, the department issued an order dated 23.06.2023 and imposed tax liability of Rs.14,97,072/- and an equal amount by way of penalty by comparing the petitioner’s GSTR 3B return and GSTR 2A. It filed writ petition against the demand order and contended that the impugned order proceeded on completely different basis from the show cause notice.

High Court Held

The Honorable High Court noted that the impugned order did not proceed on basis of sales suppression and if department intended to modify tax proposal in light of petitioner’s reply, a fresh show cause notice should have been issued. Therefore, it was held that the impugned order was liable to be set aside by leaving it open to the department to initiate fresh proceedings by issuing a show cause notice to the petitioner.