2024 (10) TMI 958 - HC - GST

Taxpayer's Challenge to GST Order Fails Due to Procedural Lapses and Unaddressed Show Cause Notices Under Section 107

M/s. Max Hair Clinic Pvt. Ltd. Versus The State Tax officer, Chennai

M/s. Max Hair Clinic Pvt. Ltd. Versus The State Tax officer, Chennai - TMI Issues:Challenge to ex-parte order under GST Act invoking Sections 73 and 74, violation of principles of natural justice, opportunity of personal hearing, input tax credit availed on fake invoices, demand of total tax liability, maintainability of Writ Petition without exhausting appeal remedy under Section 107 of the Act.Analysis:The petitioner challenged an ex-parte order dated 15.02.2024 passed by the respondent under the GST Act, alleging a violation of natural justice principles as no personal hearing was provided. The petitioner claimed to have purchased goods from a registered supplier, Haresh Enterprises, who collected tax and reported it in their returns. However, the respondent issued a show cause notice demanding repayment of input tax credit due to the supplier's suspended GST registration. The petitioner paid the tax but not the interest, leading to the impugned order under Section 74 of the Act. The petitioner argued that the order was passed without considering Sections 73 or 74 of the Act, violating natural justice principles.The respondent contended that the petitioner was given multiple opportunities to explain discrepancies but failed to respond adequately. The respondent issued reminder notices and provided a personal hearing opportunity, which the petitioner did not avail. The respondent justified the impugned order as necessary due to the alleged fraudulent activity of availing input tax credit based on fake invoices without actual movement of goods. The respondent demanded reversal of credit, interest, and penalty, which the petitioner did not comply with, leading to the Section 74 order.The Court noted that the respondent's actions were based on the dealer's suspension and alleged fraudulent activities by the petitioner. The Court found that the petitioner did not respond to the show cause notice or avail the personal hearing opportunity. The Court rejected the petitioner's claim of lack of personal hearing and upheld the impugned order demanding the total tax liability. The Court emphasized that the petitioner had an appeal remedy under Section 107 of the Act, which should have been exhausted before filing the Writ Petition. As the petitioner did not do so, the Writ Petition was deemed not maintainable, leading to its dismissal without costs.