Demand of Tax, Interest, and Penalty in Form DRC-01A without issue of Notice u/s 74(1) TNGST Act

The Madurai Bench of Madras High Court presided by Mr. Justice M. Nirmal Kumar has held that demand of tax, interest, and penalty in Form DRC-01A without the issue of notice u/s 74(1) Tamil Nadu Goods Service Tax Act and set-asides assessment order.

The petitioner, M/s. Anantham Retail Private Limited was engaged in the trading of textiles and garments and they were also having showrooms in Kumbakonam and Thanjavur. The petitioner’s principal place of business Ramanathapuram and additional places of business Thanjavur, Kumbakonam, Pudukkottai, and go downs were inspected by the Intelligence Wing Officials under Section 67 of the TNGST Act.

During the surprise inspection, certain defects were pointed out based on the business transactions, and hence, notice was issued to the dealers. The petitioner raised objections but, according to the respondents, the objections were not convincing and not acceptable hence, confirmed the demand made in Form DRC-01A. Aggrieved, the petitioner filed a writ petition before the High Court.

The counsel for the petitioner submitted that the petitioner replied in Part-B of Form DRC-01A stating that the liability to tax as stated in subject intimation, as well as the quantification, are not agreeable as the same is not correct on facts and law.

The High Court observed that after the issuance of notice in Form DRC-01A, dated 06.12.2021, the respondent has issued Form GST DRC-01A. Thereafter, if the petitioner has got any objection and has not paid tax as ascertained, a show-cause notice has to be issued under Section 74(1) of the TNGST Act and after receiving objections, giving a personal hearing, the assessment order ought to have been finalized. The respondent failed to follow the procedure.

The single bench has set aside the assessment order and held that “the respondent is directed to issue notice after following the procedures prescribed under the TNGST Act and issue show cause notice and after allowing filing their objections, pass appropriate orders on merits and in accordance with law”.