Top Stories GST Recovery and Hearing Notices ignored: Madras HC orders 25% Pre-Deposit from Cash Ledger for Fresh Consideration [Read Order] It was directed to treat the previous order as an addendum to the show cause notices (DRC-01A and DRC-01), and the petitioner was directed to file a consolidated reply within 30 days By Navasree A.M – On October 21, 2024 12:09 pm – 2 mins read In a matter of ignorance of the Goods and Services Tax ( GST ) recovery notices and the hearing notices, the Madras High Court has ordered the pre-deposit of 25% from the Electronic Cash Ledger ( ECL ) for the fresh consideration. The petitioner, Sornam Medicals sought relief from the order dated 31.12.2023, issued by the second respondent, following alleged failures to respond to statutory notices related to GST recovery and also failed to avail the personal hearing opportunity. Complete Supreme Court Judgment on GST from 2017 to 2024 with Free E-Book Access, Click here The recovery notices in question were DRC-01A, dated 23.09.2023, and DRC-01, dated 29.09.2023. Additionally, the petitioner did not attend a personal hearing notice issued on 09.11.2023.

Mr.B.Rooban, the petitioner’s counsel argued that the impugned order was passed without granting the petitioner the required three opportunities to present a defence, as mandated under Section 75(5) of the GST Act. The counsel further submitted that while the petitioner had filed regular GST returns up to November 2017, the petitioner had subsequently opted for the composite scheme under Section 10 of the GST Act, which exempted them from availing input tax credits (ITC). The department, however, arrived at a turnover discrepancy based on GSTR-2A data, without considering that the petitioner was no longer availing ITC after the switch to the composite scheme. Complete Supreme Court Judgment on GST from 2017 to 2024 with Free E-Book Access, Click here Due to these discrepancies, the petitioner contended that the demand raised was unjust and sought a fresh opportunity to present their case. The petitioner expressed willingness to comply with any reasonable terms that would secure the government’s revenue interests, believing that success was likely if given a fair chance to explain.

The department’s counsel, Mr.R.Suresh Kumar, however, strongly opposed the petition, arguing that it was time-barred. Citing the Supreme Court’s ruling in Assistant Commissioner (CT) LTU, Kakinada & Ors. vs. GlaxoSmithKline Consumer HealthCare Limited, the counsel stated that the writ petition should be dismissed for delay. Additionally, the counsel pointed out that the petitioner had also failed to avail the appellate remedy within the limitation period under Section 107 of the GST Act, referencing the Supreme Court’s decision in Singh Enterprises vs. Commissioner of Central Excise. Complete Supreme Court Judgment on GST from 2017 to 2024 with Free E-Book Access, Click here The bench of Justice C. Saravanan ruled that the petitioner should be granted an opportunity to ventilate their grievance. However, this relief was conditional. The court ordered the petitioner to deposit 25% of the disputed tax amount from their electronic cash ledger within 30 days.

The court quashed the impugned order and remitted the case back to the second respondent for fresh consideration on the merits. It was directed to treat the previous order as an addendum to the show cause notices (DRC-01A and DRC-01), and the petitioner was directed to file a consolidated reply within 30 days. The court also made it clear that failure to deposit the amount or submit the reply would result in the respondent proceeding as if the writ petition had been dismissed. The petitioner was assured a personal hearing before the final order was issued