GST Demand Order Set Aside for Lack of Tax Determination and Non-Compliance with Circular; Matter Remanded
Issue: Whether a GST demand order issued under Section 74 is valid when it fails to determine the tax payable by the assessee and does not adhere to the guidelines issued in a relevant circular.
Facts:
- The assessee challenged a demand order issued under Section 74 of the GST Act for the period 2019-20.
- The impugned order did not specify the amount of tax payable by the assessee.
- The order also did not comply with the guidelines provided in Circular No. 8/2024, dated August 29, 2024.
Decision:
- The court held that the impugned order was arbitrary and liable to be set aside.
- The failure to determine the tax payable and the non-compliance with the circular rendered the order invalid.
- The matter was remanded for fresh consideration, directing the authorities to determine the tax liability in accordance with the law and the guidelines provided in the circular.
Key Takeaways:
- This case highlights the importance of proper tax determination and adherence to relevant circulars and guidelines in GST demand orders.
- Demand orders that do not specify the tax payable or fail to comply with relevant guidelines can be considered arbitrary and set aside.
- This decision ensures that taxpayers are provided with clear and specific information regarding their tax liability and that assessments are conducted in a transparent and consistent manner.
HIGH COURT OF MADRAS
Tvl.Chellam Motors (P.) Ltd.
v.
State Tax Officer-V
K. Kumaresh Babu, J.
W.P.(MD) No.1481 of 2025
W.M.P.(MD) Nos.1062 and 1065 of 2025
W.M.P.(MD) Nos.1062 and 1065 of 2025
JANUARY 21, 2025
S.Muthuvenkatraman for the Petitioner. R.Suresh Kumar, Addl. Govt. Pleader for the Respondent.
ORDER
1. The challenge in the writ petition is to the assessment order of the year 2019-20.
2. The Primordial contention of the learned counsel for the petitioner is that neither the provisions of Section 74 of the Tamil Nadu Goods and Services Tax Act, 2017 (hereinafter referred to as “the Act”) which envisages a determination by the Assessing Officer of the proposal made under the show cause notice has been invoked, nor the circular issued by the Commissioner, State Tax, Commercial Taxes Department, Ezhilagam, Chennai, in Circular No.8/2024, dated 29.08.2024 has been followed by the Assessing Officer while issuing the order of demand.
3. A perusal of the order impugned herein would also show that the Assessing Officer had not made any determination of the tax payable by the petitioner as envisaged under Section 74 of the Act, nor has followed the guidelines issued in Circular dated 29.08.2024 of the Commissioner of State Tax. In such view of the matter, I am of the view that the order impugned suffers from vice of arbitrariness. For the said reason, the order impugned is liable to be interfered with.
4. In fine, this Writ Petition is allowed, the impugned order is set aside and the matter is remitted back to the first respondent for fresh consideration. The petitioner shall file his reply along with supporting documents within a period of two weeks from the date of receipt of a copy of this order and thereafter, the first respondent shall provide an opportunity of hearing to the petitioner and pass a reasoned order on merits and in accordance with law within a period of eight weeks thereafter. There shall be no order as to costs. Consequently, connected miscellaneous petitions are closed.