GST Compliance: Madras High Court Urges Department to Issue Advisory on Qualified Consultants

GST Compliance: Madras High Court Urges Department to Issue Advisory on Qualified Consultants

Introduction

The Madras High Court has directed the GST Department to issue a circular/note urging assessees to engage only qualified consultants for compliance. The Court observed that ill-advice from unqualified consultants has repeatedly led to serious consequences for assessees, including inability to respond properly to show cause notices and freezing of accounts.

Factual Background

The assessee, Chandrasekaran, Proprietor of Subha Earth Movers, received a show cause notice but, due to the ill-advice of an unqualified consultant, filed an irrelevant reply. This led the Assistant Commissioner to pass an impugned order and freeze the assessee’s bank account, resulting in a standstill of business operations.

Procedural Background

Justice Krishnan Ramasamy noted that such instances were recurring before the Court. He observed that unqualified consultants, often overburdened with multiple clients, provided careless advice, which left assessees unable to appear before the authorities with suitable replies supported by documents.

The Court held that this practice cannot be permitted and directed the Department to issue a circular/notice to all assessees, advising them to engage only qualified consultants.

Contentions of the Parties

• Assessee’s Contention: The assessee argued that it had been prejudiced solely because of the consultant’s negligence. It sought the setting aside of the impugned order and an opportunity to properly present its case.
• Department’s Contention: No substantial opposition was recorded; the Court primarily focused on systemic safeguards needed to prevent recurrence of such cases.

Issues

1. Whether the Department should issue a circular advising assessees to engage only qualified consultants for GST compliance?

2. Whether ill-advice given by unqualified consultants justifies granting relief to an assessee?

Reasoning and Analysis

The Court emphasized that ill-advice by unqualified consultants leads to miscarriage of justice, economic hardship, and unnecessary litigation. It stated that wrong advice given by unqualified persons cannot be accepted.

Accordingly, the bench directed the Department to immediately issue a circular/notification to all assessees urging them to engage only qualified consultants or otherwise file petitions personally or through responsible employees/relatives.

Outcome

The Court:

• Directed the Department to issue a circular/note urging assessees to engage only qualified consultants for GST compliance.
• Set aside the impugned order passed against the assessee.
• Granted one more opportunity to the assessee to submit a fresh and proper reply.

Implications

This judgment underscores the critical role of qualified consultants in GST compliance and highlights the Court’s effort to curb the growing menace of ill-advice from unqualified practitioners. It also demonstrates judicial concern for protecting assessees from procedural injustice while ensuring better compliance mechanisms.

Representation

In this case the assessee was represented by M/s. R. Ananthi, Advocate. Meanwhile the respondent was represented by Ms. P.Selvi, Advocate.