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SCN and Order devoid of required particulars to contest claim of erroneous refund is void

Date 18 Jan 2025
Written By
Madras High Court: Show-Cause Notices Without Detailed Information Are Invalid; Stresses Need for Specifics in Tax Refund Cases.
The Madras High Court ruled that a show-cause notice (SCN) and subsequent order issued without necessary details to contest a claim of erroneous refund are void. The case involved a company seeking a refund of accumulated Input Tax Credit under an inverted duty structure. The SCN issued lacked specifics, and despite requests for a detailed breakdown, the department issued an order demanding repayment. The court quashed the order, emphasizing the necessity for SCNs to provide adequate particulars to allow the assessee to respond effectively, and remanded the matter for reconsideration. - (AI Summary)

The Hon’ble Madras High Court in the case TVL. ORANGE SORTING MACHINES (INDIA) PRIVATE LIMITED VERSUS ASSISTANT COMMISSIONER COIMBATORE. DEPUTY STATE TAX OFFICER-I ANNUR CIRCLE, COIMBATORE. - 2024 (6) TMI 1237 - MADRAS HIGH COURT allowed the writ petition and held that the SCN issued, and order passed without providing required particulars based on which refund has been rejected is void

Facts:

Tvl. Orange Sorting Machines (India) (P.) Ltd (“the Petitioner”) is engaged in the manufacturing of machines and claimed refunds of accumulated Input Tax Credit (“ITC”) under inverted duty structure.  However, show-cause notice dated September 22, 2023 (“the SCN”) was issued in relation to refund applied. The Petitioner in its reply dated December 18, 2023 requested for a breakup of the amount for which specified as erroneous refund.  The Department without providing a breakup of the claimed amount issued an order dated December 29, 2023 (“the Impugned Order”) demanding payment towards erroneous refund.

Issue:

Whether the SCN issued and order passed without providing required particulars based on which refund has been rejected is void?

Held:

The Hon’ble Madras High Court in TVL. ORANGE SORTING MACHINES (INDIA) PRIVATE LIMITED VERSUS ASSISTANT COMMISSIONER COIMBATORE. DEPUTY STATE TAX OFFICER-I ANNUR CIRCLE, COIMBATORE. - 2024 (6) TMI 1237 - MADRAS HIGH COURT held as under

  • Noted that, the SCN is required to provide the relevant particulars to enable the Assessee to understand the nature of alim being made against the Assessee, as it would not be possible for assessee to reply in meaning manner.
  • Opined that, the SCN issued did not provide required particulars and merely stated the point of erroneous refund on account of inverted duty structure. Even after requesting, no details were provided and the Impugned Order was passed.
  • Further Opined that, the Impugned Order and SCN is bereft of required particulars, thus the order calls for interference.
  • Held that, the Impugned Order is quashed and matter is remitted back for reconsideration.

 (Author can be reached at info@a2ztaxcorp.com)

Goods and Services Tax - GST
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