Madras HC: Wrong Advice by Consultant Cannot Prejudice Taxpayer, GST Order Remanded

The Madras High Court has recently given an opportunity to a taxpayer who received a final order due to the irrelevant reply filed by the consultant of the petitioner against a show cause notice.

The petitioner, Chandrasekaran, received a show cause notice on 22.05.2024 from the GST department, against which the petitioner’s consultant filed a reply which was not related to the issue. Due to this, the GST Department passed a final order on 21.08.2024. The petitioner’s bank was also frozen, which affected the petitioner’s company. Therefore, the petitioner approached the Madras High Court.

As per the petitioner, it was a mistake from their consultant’s side. The petitioner requests the court to give one more chance by quashing the order. The petitioner also came forward to pay 25% of the disputed tax amount to the GST Tax Officer.

The Bench, comprising Mr Justice Krishnan Ramasamy, noted there have been many similar cases where the assessees suffer because of the ill-advice given by unqualified consultants. The court called this unacceptable and directed the tax department to issue a circular advising taxpayers to approach only qualified consultants.

Since the petitioner’s business was affected due to this, the Court decided to give one more chance to the petitioner. It set aside the final Order dated 21.08.2024, and remanded the matter to the GST department, subject to the payment of 25% of the disputed tax within four weeks. The court clearly mentioned that the order will be considered as set aside only from the date of the payment. The court has the following directions:

• The Taxpayer must file their reply and the required documents within three weeks.
• The reply must be considered by the GST Officer and they must issue a 14-day clear notice for a personal hearing and then pass the final order.
• Since the order is set aside, the bank account must be unfrozen immediately once a copy of this court order is shown to the bank.