09 May 2024 GST >> Tax Laws  

M/s. Dhanalakshmi Agencies, a distributor of sweets and snacks, has received a reprieve from the High Court in a dispute with the Goods and Services Tax (GST) Department. The court order quashes a demand order issued by the GST department for unpaid taxes from the assessment year 2017-18.

The crux of the issue stemmed from alleged mistakes in filing monthly GST returns. M/s. Dhanalakshmi Agencies claimed they incorrectly reported Input Tax Credit (ITC) during that period. Additionally, they argued that the tax demanded by the department was not applicable under the Reverse Charge Mechanism (RCM) since they only procured supplies from a registered vendor.

The crux of the dispute, however, revolved around communication. The company claimed they were not given a proper opportunity to respond to the notices leading to the demand order. They argued that the GST department issued crucial notices, including intimation, show cause notice, and reminder, in a different section of the online GST portal than usual. This, they claimed, led them to be unaware of the proceedings against them.

The GST department, on the other hand, maintained that they followed proper procedure and uploaded all the notices as per regulations.

The court, after examining the arguments, sided with the company to a certain extent. The court order quashes the demand order but imposes a condition. M/s. Dhanalakshmi Agencies must deposit 10% of the disputed tax amount within four weeks of receiving the court order. Upon receiving this payment, the GST department is directed to reconsider the case and provide the company with a chance to respond to the notices. The department must then issue a fresh assessment order within six weeks of receiving the 10% payment.

This case highlights the importance of staying informed about GST regulations and regularly checking the GST portal for any notices or updates. It also underscores the significance of proper communication between businesses and the tax department.