In a significant ruling, the Madras High Court granted relief to a taxpayer by allowing an appeal against a Goods and Services Tax (GST) demand order. The case highlights the consequences of a GST consultant’s failure to submit a proper response and emphasizes the importance of procedural fairness.
The petitioner, M/s. Star Brand Enterprises, a trader dealing in cashew kernels, raisins, and toor dal, challenged a GST demand order dated 20.03.2024. The order had raised a total demand of Rs. 69,62,780, inclusive of tax, interest, and penalties, based on a show cause notice (SCN) issued on 15.12.2023.
Upon receiving the SCN, the taxpayer engaged a GST consultant to handle the matter. During the personal hearing held on 05.03.2024, the consultant requested additional time to submit a detailed response. However, instead of furnishing a comprehensive reply with supporting documents, only a brief and vague denial of allegations was submitted. As a result, the GST department confirmed the demand in the absence of a proper defense.
Further complicating the situation, the taxpayer had shifted business premises, and the final order was delivered to the old address, leaving the petitioner unaware of the outcome. The taxpayer only discovered the demand order after the appeal deadline had lapsed in August 2024, preventing timely legal recourse.
Subsequently, M/s. Star Brand Enterprises approached the Madras High Court, expressing willingness to deposit 25% of the disputed tax amount and requested an opportunity to file a fresh reply along with documentary evidence. The petitioner also sought a chance to be heard on merits.
The Senior Standing Counsel for the GST department did not object to the petitioner’s request and left the matter to the court’s discretion.
Justice Krishnan Ramasamy, acknowledging the taxpayer’s explanation for the delay and the interest shown in contesting the demand, ruled in favor of the petitioner. The court set aside the impugned order with specific directions.
As per the judgment:
- The petitioner must deposit 25% of the disputed tax within four weeks.
- A comprehensive reply along with necessary documents must be filed within two weeks thereafter.
- The GST authorities must provide at least 14 days’ notice for a personal hearing.
- A fresh order should be passed based on the merits of the case.
Case Details:
Title: M/s. Star Brand Enterprises vs. Deputy Commissioner, GST and CE
Case No.: WP No. 12185 of 2025 with WMP No. 13744 & 13745 of 2025
This judgment reaffirms the judiciary’s commitment to natural justice and procedural fairness, offering taxpayers an opportunity to present their case effectively when procedural lapses occur due to representation errors.