Anantham Retail (P.) Ltd. VS State Tax Officer

The case involves a petitioner who was previously engaged in trading textiles and garments, operating showrooms in Kumbakonam and Thanjavur through partnership firms. In September 2019, these partnership firms were dissolved, and a new entity, the petitioner company, was formed. The new company continued the trading activities from the three showrooms previously operated by the partnership firms in Ramanathapuram, Kumbakonam, and Thanjavur.

During September 14-16, 2021, officers from the State Tax Department conducted an inspection under Section 67 of the Tamil Nadu Goods and Services Tax (TNGST) Act at the three showrooms. This surprise inspection revealed certain irregularities in the transactions of the dealers. Subsequently, a revision of assessment was carried out based on the findings of the inspection report.

Following this assessment revision, show cause notices were issued to the dealers, requiring them to explain the identified irregularities with documentary evidence. This marks the background of the case, setting the stage for further legal proceedings and actions to address the discrepancies discovered during the inspection.

The learned counsel representing the petitioner asserts that the respondent, in accordance with Rule 142(1A) of the Tamil Nadu Goods and Services Tax (TNGST) Rules, 2017, issued communications in Form DRC-01A on December 6, 2021, for the fiscal years 2019-20, 2020-21, and 2021-22. These communications highlighted defects related to tax liabilities and the non-maintenance of accounts. Upon receiving these communications, the petitioner requested 30 days’ time to provide their response, as indicated in a letter dated December 22, 2021.

Subsequently, on December 28, 2021, the respondent directed the petitioner to appear for a personal hearing. In response, the petitioner, through a letter dated January 3, 2022, replied in Part-B of Form DRC-01A, stating their disagreement with the tax liability and quantification mentioned in the communication. They contended that the stated liabilities were incorrect both factually and legally.

The counsel for the petitioner further argues that the inspection and investigation conducted by different officers were flawed, leading to misunderstandings of facts, misinterpretations of provisions, and erroneous application of tariff and exemption notifications. Additionally, they claim that the proceedings were inherently flawed, with information and statements collected under the guise of inducing the dropping of proceedings, violating principles of natural justice and rendering them unreliable. As a result, they assert that the demand made in Form DRC-01A should be rejected. This outlines the petitioner’s stance regarding the procedural and substantive issues surrounding the case.

The petitioner in this case asserts that Officers from the State Tax Department conducted inspections at three branches of their company under Section 67 of the TNGST Act, pursuant to orders from the Joint Commissioner of State Taxes (Intelligence) in Form GST INS-01, at Kumbakonam, Thanjavur, and Ramanathapuram showrooms. During these inspections, statements were recorded from the Manager and Directors of the petitioner company. Following this, the respondent issued communications in Form DRC-01A on December 6, 2021, separately for the partnership firm M/s.Anantham Silks for the years 2017-2018, 2018-2019, 2019-2020, and 2020-2021. For the petitioner, similar communications dated December 6, 2021, in Form-DRC-01A were issued for the years 2019-2020, 2020-2021, and 2021-2022. These communications outlined various defects observed during the inspection and provided details of taxes, interest, and penalties payable by the petitioner company under each category. It was mentioned in the communications that if the petitioner had any objections to the notice, they were required to file a written reply before the ‘Proper Officer’ within 15 days from the date of receipt of the notice. Failure to do so would result in orders being passed confirming the tax, penalty, and interest as proposed in the notice, in accordance with the provisions of the Act and the Rules. The notice highlighted specific defects that were identified during the inspection process.

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