K.C. Mathaiyan vs Assistant Commissioner (ST)

The present writ petition challenges an assessment order dated 19.04.2023 issued against the petitioner, who is a works contractor specializing in civil work for government departments and local authorities. The petitioner asserts that the issue originated with a show cause notice issued in February 2023, which was predicated on alleged discrepancies between the GSTR-1 statement and the GSTR-3B returns filed by the petitioner. In response to this notice, the petitioner made a remittance of Rs. 3,00,000/- on 12.04.2023, aiming to cover the tax liability in question. The petitioner contends that this payment was made proactively, even before the impugned assessment order was issued. However, it is claimed that this remittance was not acknowledged or credited appropriately in the assessment process, which subsequently led to the imposition of a significant penalty amounting to 100% of the tax dues under Section 74 of the Tamil Nadu Goods and Services Tax Act, 2017. The petitioner argues that the delay in reconciling the discrepancies was due to delayed payments from government departments, which affected the timely filing and adjustment of tax returns.

The petitioner’s learned counsel has specifically pointed out that the payment made under Form GST DRC-03 was duly processed before the issuance of the impugned order. This payment, according to the petitioner, was not considered in the final assessment, thereby leading to an unjust penalty. The counsel further argues that the imposition of a 100% penalty was excessive and not justified given the circumstances, particularly considering the petitioner’s prompt action to address the discrepancies once they were identified. On further instructions, the petitioner is willing to remit an additional sum of Rs. 3,00,000/- as a condition for remand, showing a proactive approach to resolving the issue and indicating a readiness to comply with any further necessary adjustments.

In contrast, Mr. T.N. Kaushik, the learned Additional Government Pleader representing the respondents, has accepted notice and contends that the impugned assessment order was issued following proper procedure. He refers to the fact that the order was preceded by an intimation, a show cause notice, and a personal hearing notice, and argues that the petitioner’s lack of participation in these proceedings undermines the argument for interference with the order. Mr. Kaushik maintains that the petitioner had ample opportunity to contest the tax demand during the assessment process but failed to do so, thereby challenging the grounds for the petitioner’s appeal. He asserts that, given the petitioner’s non-participation and the adherence to procedural norms by the authorities, there are no valid grounds for altering or setting aside the impugned order.

In conclusion, the petitioner’s challenge to the assessment order revolves around the claim that their payment was not duly accounted for and the imposition of a 100% penalty was excessive. The petitioner’s readiness to make an additional remittance and the procedural arguments presented by the respondents set the stage for judicial scrutiny of the fairness and correctness of the assessment process and the penalty imposed.