Madras HC Cancels GST Order for Non-Reply to SCN; Allows Fresh Adjudication with 10% Pre-Deposit

The Madras High Court has set aside a GST demand order that was passed after the taxpayer failed to respond to the Show Cause Notice (SCN). The court granted the taxpayer another opportunity to contest the case but directed a 10% pre-deposit of the disputed tax amount.

In the case, the tax department had issued a show cause notice under the Central Goods and Services Tax Act, 2017. Since the taxpayer did not submit a reply within the prescribed time, the authorities passed an ex-parte order confirming the tax demand.

The taxpayer later approached the High Court arguing that the order was passed without proper consideration and without granting an effective opportunity of hearing.

The High Court observed that tax matters should ideally be decided after giving the taxpayer a reasonable opportunity to present documents and explanations. Considering the circumstances, the court decided to quash the impugned GST order and allow the taxpayer to file a fresh reply.

However, to balance the interests of revenue, the court directed the taxpayer to deposit 10% of the disputed tax amount as a condition for reconsideration. After the deposit, the adjudicating authority must re-examine the case and pass a fresh order after providing proper hearing.

This ruling reinforces the principle that natural justice must be followed in GST proceedings, and taxpayers should be given a fair chance to defend their case.

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Source:https://blog.saginfotech.com/madras-hc-cancels-gst-order-non-reply-scn-fresh-adjudication-10-percent-deposit