Top Stories Madras HC grants Taxpayer Opportunity to Contest Despite not Submitting E-way Bill or Lorry Receipt; Sets aside Order with 5% Penalty Remittance [Read Order] Instead of providing essential records like e-way bills or lorry receipts to demonstrate goods movement within their group entities, the petitioner only asked for more time to gather them, noted the bench By Navasree A.M – On April 13, 2024 8:01 pm – 2 mins read The Madras High Court, setting aside the Penalty, has granted a second opportunity to contest the GST demand despite not submitting the E-way bill or the lorry receipt with a condition of 5% penalty remittance.

The petitioner, engaged in the metal scrap trading business, found themselves under scrutiny following a surprise inspection conducted by the State Tax Department at their registered place of business and other branches in May 2022. The subsequent events unfolded with an intimation issued to the petitioner in November 2023, followed by a show cause notice dated 08.11.2023. The petitioner, citing the need to gather extensive data for a comprehensive reply, requested an additional 30 days to respond to the show cause notice, as notices were received spanning five financial years. However, despite this plea, the impugned order imposing penalties was issued on 22.01.2024. The Petitioner’s counsel submitted that they are part of a larger group of entities, including Sonali Extrusion Private Limited and Sonali Metal Industries LLP. Further argued that since the license for the procurement of metal scrap was issued to Sonali Extrusion Private Limited, they were compelled to source goods from this entity. The petitioner vehemently denied engaging in bill trading despite transactions with the aforementioned entities. On the contrary, the Government Advocate contended that ample opportunities were provided to the petitioner to substantiate the genuineness of the transactions. Quoting a precedent from the Kerala High Court in C.Prasannakumaran Unnithan v.

The Commissioner of Income Tax (Appeals) and another, it is argued that failure to avail oneself of such opportunities precludes complaints about breaches of natural justice. The court noted that the petitioner had multiple chances to contest the penalty claim, as evidenced by available documents. Instead of providing essential records like e-way bills or lorry receipts to demonstrate goods movement within their group entities, the petitioner only asked for more time to gather them. Despite claiming to possess pertinent documents, significant penalties were imposed without their consideration. Given these circumstances and the petitioner’s request for an extension, the court deemed it appropriate to grant another opportunity, albeit with conditions. Ultimately, a Single bench of Justice Senthilkumar Ramamoorthy opted for a remand, setting aside the impugned orders on the condition that the petitioner remits 5% of the penalty under each order, within three weeks, accompanied by a detailed reply to the show cause notices, inclusive of all relevant documents. Once these conditions are met, the respondent was directed to provide a reasonable opportunity to the petitioner, including a personal hearing, before issuing fresh orders within two months.