Facts of the Case

The Petitioner, Tvl.Kasthyar Industries, Thoothukudi, challenged an assessment order dated 04.01.2023 passed by the State Tax Officer under Section 74 of the Tamil Nadu Goods and Services Tax Act, 2017, before the Madurai Bench of the Madras High Court. The Petitioner contended that the assessing authority had failed to properly compute the input tax credit relatable to its suppliers, and had instead treated the entire transactions with those suppliers as bogus, notwithstanding that the Petitioner held valid purchase invoices which were not accepted by the Respondent. The Petitioner further contended that the show cause notices preceding the order had been uploaded only on the web portal, and since the Petitioner was not conversant with the portal, it was effectively prevented from contesting the proceedings before the passing of the order.

Issues Involved

  1. Whether the assessment order under Section 74 of the TNGST Act, 2017, denying input tax credit by treating supplier transactions as bogus, was liable to be quashed for want of effective notice and opportunity.
  2. Whether the Petitioner, having a statutory appellate remedy under Section 107 of the TNGST Act, should instead be directed to avail the GST Council's amnesty scheme for filing a belated appeal.

Petitioner's Arguments

  • The Respondent had not properly calculated the input tax credit of the Petitioner's suppliers and had wrongly treated the entire supplier transactions as bogus, despite the Petitioner holding valid invoices.
  • Notices were issued only through the web-portal, and the Petitioner, being unacquainted with the portal, was prevented from effectively contesting the proceedings.

Respondent's Arguments

  • The Petitioner had an appellate remedy under Section 107 of the TNGST Act, 2017, to be exercised within 90 days of communication of the order, which had lapsed.
  • However, pursuant to the minutes of the GST Council dated 07.10.2023, an amnesty scheme under Section 148 of the TNGST Act was recommended for taxpayers who could not file appeals against orders passed under Sections 73 or 74 on or before 31 March 2023, permitting appeals up to 31 January 2024 subject to conditions.

Court Order/Findings

  • The Court noted that the Petitioner had a statutory appellate remedy under Section 107 of the TNGST Act, and that the limitation for filing such appeal had been extended by the GST Council up to 31.01.2024 through the amnesty scheme.
  • The Court held that the writ petition should be disposed of with liberty to the Petitioner to file a statutory appeal before the Appellate Authority within two weeks from receipt of the order, availing the extended limitation under the GST Council's amnesty recommendation, rather than deciding the merits of the ITC denial itself.
  • The writ petition, along with connected miscellaneous petitions, was disposed of with no order as to costs.

Important Clarification

Where an assessee alleges denial of a fair hearing in a Section 74 TNGST assessment but also has access to the GST Council's amnesty scheme for belated appeals, courts will generally decline to examine the merits of the assessment and instead direct the taxpayer to the appellate forum within the extended limitation window.

Sections Involved

  • Section 74 of the Tamil Nadu Goods and Services Tax Act, 2017 — determination of tax not paid by reason of fraud or wilful misstatement.
  • Section 107 of the Tamil Nadu Goods and Services Tax Act, 2017 — appeal to Appellate Authority.
  • Section 148 of the Tamil Nadu Goods and Services Tax Act, 2017 — special procedure for amnesty, per GST Council recommendation dated 07.10.2023.

Decision – In Favour of

The outcome is procedurally favourable to the Assessee to the extent it preserves the appellate remedy through the amnesty window, but the Court did not examine or decide the merits of the ITC denial, leaving the substantive dispute open before the Appellate Authority. The Petitioner's grievance regarding portal-only service of notices and the alleged failure to properly compute supplier-side ITC will now have to be argued afresh before the Deputy Commissioner (GST), Madurai, as the Appellate Authority, which will examine both the natural-justice complaint and the correctness of treating the supplier transactions as bogus once the appeal is filed within the two-week window granted by the Court.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: Madurai Bench of Madras High Court
  • Case No.: W.P.(MD).No.23969 of 2023
  • CNR: Not available
  • Coram: Hon'ble Mr. Justice B. Pugalendhi
  • Decision Date: 9 October 2023
  • Disposal Nature: Writ disposed of with liberty to file statutory appeal under GST amnesty scheme

Link to Download the Order

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