Facts of the Case

M/s. C. Siva Anand, trading as Anand Hardwares and Electricals, GSTIN 33CUMPS7718F1Z8, represented by its proprietor Mr. Chellan Sivanand and based in Kanyakumari district, filed W.P.(MD) No.23752 of 2023 before the Madurai Bench of the Madras High Court. The petitioner sought a writ of certiorarified mandamus to quash an assessment order — OC No.289/2023, Order-in-Original No.GST/TNVL/SUPDT/MTM/37/2023 dated 26.06.2023 — passed by the Superintendent of GST and Central Excise, Marthandam Range, and to direct a fresh order after considering the petitioner's reply and records dated 26.04.2023. The impugned order had raised a demand of interest amounting to Rs.6,04,427, along with tax and penalty, despite the petitioner's case that the entire tax for the relevant period had already been discharged through Input Tax Credit. The matter was heard and decided on 29.09.2023 by Justice S. Srimathy.

Issues Involved

  1. Whether the impugned assessment order, which imposed interest and penalty despite the petitioner's claim of full tax payment via Input Tax Credit, was legally sustainable.
  2. Whether the order qualified as a "non-speaking" order for failing to deal with the grounds raised in the petitioner's reply.
  3. Whether the principle laid down in Refex Industries Limited v. The Assistant Commissioner of CGST & Central Excise applied to the facts.

Petitioner's Arguments

  • Contended that the entire tax for the disputed period had been paid through Input Tax Credit, and that if this fact were properly taken into account, no tax liability — and consequently no interest liability — would arise.
  • Pointed out that the respondent had nonetheless imposed tax, penalty and interest without engaging with any of the grounds raised in the petitioner's reply dated 26.04.2023, and that the operative portion of the impugned order was effectively a single line recording the conclusion.
  • Relied on M/s. Refex Industries Limited v. The Assistant Commissioner of CGST & Central Excise, 2020(2) TMI 794 – Madras, for the proposition that interest is not leviable where the tax liability has already been discharged through available Input Tax Credit.

Respondent's Arguments

  • Appeared through the Senior Standing Counsel and Junior Standing Counsel for GST; the order does not record any elaborated justification for the interest demand beyond the reasoning already contained in the impugned order itself.

Court Order/Findings

  • The Court examined the impugned order and found that it did not discuss any of the grounds raised by the petitioner, extracting the operative portion which simply stated that the petitioner had "failed to pay the interest till date" and that the reply "is also not tenable," without further reasoning.
  • The Court held that this was a non-speaking order and, on that basis, quashed it, remitting the matter to the respondent for fresh consideration in light of the Refex Industries principle on interest liability where tax has been paid through Input Tax Credit.
  • The respondent was directed to pass a fresh order after affording the petitioner a personal hearing, to be completed within four months from receipt of the order.

Important Clarification

  • An assessment or demand order that merely records a conclusion without engaging with the specific grounds raised in the taxpayer's reply is liable to be quashed as a "non-speaking order," even where the amount in dispute is limited to interest.
  • Where the entire tax for a period has been discharged through Input Tax Credit before the initiation of proceedings, the adjudicating authority must specifically deal with the Refex Industries principle on interest liability before confirming any interest demand.

Sections Involved

  • Section 50, CGST Act, 2017 – governs interest on delayed payment of tax, the provision underlying the Rs.6,04,427 interest demand challenged in this petition.
  • Article 226, Constitution of India – writ jurisdiction under which the certiorarified mandamus was sought to quash the non-speaking assessment order.

Decision – In Favour of

The decision is in favour of the Assessee: the non-speaking assessment order was quashed and the matter remitted for a fresh, reasoned order after a personal hearing, applying the Refex Industries principle on interest where tax has been paid through Input Tax Credit.

Related Case Laws

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

Case Details

  • Court: Madras High Court, Madurai Bench
  • Case No.: W.P.(MD) No.23752 of 2023
  • CNR: Not available on record
  • Coram: Hon'ble Mrs Justice S. Srimathy
  • Decision Date: 29 September 2023
  • Disposal Nature: Allowed – non-speaking assessment order dated 26.06.2023 quashed; matter remitted for fresh order after personal hearing

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