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Informative

Failure to consider Reply on Alleged Circular Trading and RCM: Madras HC sets aside GST Demand Order

Update / Judgement Date

26 Jun 2024

Source

Taxscan

Author

Team — WCP Legal Desk

Reading Time

1 min read

Excise, VAT & CustomGST

The Madras High Court quashed a demand order issued by the State Tax Officer to Tvl. Urayur Cotton Company for failing to consider the petitioner’s reply to allegations of circular trading and non-payment of Reverse Charge Mechanism (RCM) charges. \r


The petitioner challenged the order, which stemmed from a show-cause notice regarding circular trading and unlawful Input Tax Credit (ITC) claims. The petitioner argued that they and Santhanalakshmi Mills India LLP did not share management, and provided supporting documents, including rental agreements and registration certificates. The petitioner also claimed that their RCM liability was Rs.4,18,000, which was paid. \r


The court found that the STO had not considered these replies or documents and set aside the order. The matter was remanded for reconsideration, allowing the petitioner to submit additional documents within two weeks, with a new order to be issued within three months after a personal hearing.