May 13, 2024

The demand order is set aside as issued post cancellation of GST registration and opportunity of being heard was not given

As held by Hon’ble High Court of Madras

In the matter of

M/s. Thirumurugan Traders (Defunct) Vs The Deputy State Tax Officer – I, (WPW.P.No.8378 of 2024)

The petitioner was registered under GST and got his GST registration cancelled with effect from 27th Feb, 2019. The order was issued against the petitioner in Form GST DRC-07 for the period of July, 2017 to March, 2018. The petitioner contended that he is no longer registered under GST and therefore, he was unaware about the proceedings initiated against the petitioner. The respondent contended that notice was sent to the petitioner through registered post.

The Hon’ble High Court contended that as GST registration of the petitioner was cancelled therefore, the petitioner has little reasons to monitor the GST portal. As per principle of natural justice, the petitioner should be given a reasonable opportunity of being heard. Accordingly, the impugned order is liable to be set aside and the matter is remanded back for reconsideration.

1. Brief Facts of the case

The petitioner was registered under GST and got his GST registration cancelled on its own with effect from 27th Feb, 19. The petitioner was served with the order issued in form GST DRC-07 for the period of July, 2017 to March, 2018.
The writ petition is filed against the order issued in Form GST DRC-07.
The Petitioner contended that he is no longer registered under GST and therefore, he was unaware about the proceedings initiated against him.
The petitioner received the communication about the proceedings on receipt of notice through registered post.
The order of cancellation of GST registration of the petitioner was issued on 27.02.2019. As a consequence, the petitioner had no reason to monitor the GST portal post cancellation of GST.
The Respondent contended that the notice in Form GST ASMT-10 was sent and received by the applicant through a registered post.

2. Findings and order by Hon’ble High Court

The Hon’ble High Court of Madra analyzed that:

The order in form GST DRC-07 is issued due to discrepancy between the petitioner’s GSTR 1 and GSTR 3B returns.
However, since the petitioner’s GST registration was cancelled, they had little reason to keep checking the GST portal regularly.
The petitioner has requested for sending the case back for further consideration subject to payment of 10% of disputed tax demand as a condition for remand.
In the given case, the petitioner should be given an opportunity of being heard as per principle of natural justice.
Therefore, the impugned order is quashed and the matter is remanded for reconsideration subject to the condition that the petitioner remits 10% of the disputed tax demand
The petitioner can furnish a response to the show cause notice. Once the response is received and it’s confirmed that 10% of the tax demand was paid, the respondent will give the petitioner a fair chance, including a personal hearing.

DISCLAIMER: The views expressed are strictly of the author and VJM & Associates LLP. The contents of this article are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.

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