goods and service tax
The case of Dhanasekaran Thenmozhi vs. Deputy Commissioner, adjudicated by the Madras High Court, highlights the intricacies of the Goods and Services Tax (GST) proceedings and the implications of procedural failures. The petitioner claims a lack of communication from their consultant led to an ex parte order against them, necessitating judicial intervention.
The petitioner asserts that due to their consultant's negligence, they were deprived of a fair opportunity to dispute a service tax demand. This resulted in the issuance of an ex parte order dated 23.09.2022, which they challenge.
The petitioner's counsel argues that the contested order violates the principles of natural justice. The petitioner was eligible for a threshold exemption of Rs. 10,00,000/-, and this exemption was overlooked, raising concerns regarding procedural fairness.
In an effort to resolve the issue amicably, the petitioner proposed to remit 20% of the disputed tax demand as a precondition for remanding the case, indicating a willingness to engage with the process constructively.
The respondent's counsel maintains that proper procedures were followed, including the issuance of show cause notices and opportunities for personal hearings. The lack of response from the petitioner to these notices undermines the claim of procedural injustice.
Although the court recognizes the petitioner relied on a consultant for compliance, their explanation for being uninformed about the proceedings was deemed somewhat unconvincing. Nevertheless, the court noted an imbalance between the scale of the petitioner's business—a beauty parlour—and the magnitude of the tax demand against them.
After thorough review, the Madras High Court quashes the ex parte order and remands the case for reconsideration. The petitioner must remit 20% of the tax demand within two weeks and respond to the show cause notice in the same timeframe. The court mandates that the respondent provide the petitioner with a fair opportunity, including a personal hearing, before issuing a new order within two months. The writ petition is resolved with emphasis on maintaining procedural fairness and equitable treatment in taxation matters.
An order dated 23.09.2022 is challenged on the grounds that the petitioner was not given a reasonable opportunity to address the service tax demand.
The petitioner engaged a consultant for handling service tax compliance. Due to the consultant's failure to inform the petitioner, she remained unaware of the proceedings until notified about the ex parte order dated 23.09.2022.
The petitioner’s counsel contends that the impugned order should be reconsidered due to violations of natural justice and because the petitioner was entitled to a threshold exemption of Rs. 10,00,000/-.
Following instructions, the petitioner’s counsel accepts to remit 20% of the disputed tax demand as a prerequisite for remanding the case.
The respondent’s counsel, Mr. Ramesh Kutty, affirmed that a show cause notice was issued on 21.10.2021 and that multiple opportunities for personal hearings were provided in 2022, which the petitioner did not attend. Therefore, no grounds for interference are present.
The petitioner maintained that she relied solely on her consultant for service tax compliance and was unaware of the proceedings leading to the impugned order. While her explanation was questioned, it revealed a disproportionate tax demand against a small-scale business.
For the reasons outlined, the ex parte order is quashed and the case remanded, conditional upon the petitioner remitting 20% of the tax demand within two weeks of receiving a copy of this order. The petitioner is also permitted to respond to the show cause notice within the same timeframe. Upon such remittance and reply, the respondent must offer a fair opportunity for a personal hearing before issuing a new order within two months.
The writ petition is resolved on these terms, with no order pertaining to costs. Consequently, all associated miscellaneous petitions are closed.