M/S Shree Jagannath Traders, Cuttack vs. The Chief Commissioner GST And Central Excise, Bbsr Commissionerate

Facts

M/s. Shree Jagannath Traders, a proprietorship concern, filed a writ petition challenging an ex parte order dated 28.08.2024 passed by the Assistant Commissioner, GST & Central Excise, Cuttack-I Division. The order raised a demand of Rs.42,45,522/- (CGST Rs.21,22,761/- + SGST Rs.21,22,761/-) comprising tax, interest under Section 50(3), and penalty of Rs.4,24,552/- under Section 122(2)(a) for the Financial Year 2019-20. The assessment was framed under Section 73 of the CGST Act. The petitioner, a licensed wholesaler of Kerosene Oil under the Public Distribution System (PDS), received the demand notice only through a phone call from a GST official. The petitioner asserted that the entire claim of input tax credit (ITC) was disallowed without an opportunity to produce books of accounts and justify the ITC claim.

Held

The Court held that the petitioner was entitled to one opportunity to substantiate their claim of input tax credit before the Assessing Authority. The Court noted that the petitioner, as an authorized wholesaler dealing in a single commodity (kerosene oil) sourced from a single supplier (IOCL) for PDS, should have been given a chance to present their case. The impugned ex parte assessment order dated 28.08.2024, passed under Section 73 of the CGST Act by the Assistant Commissioner, GST & Central Excise, Cuttack-I Division, was set aside. The petitioner was directed to appear before the Assessing Authority within four weeks of receiving the order's certified copy. The Assessing Authority was instructed to proceed with the matter in accordance with the law, taking up the case forthwith or specifying a convenient date. The Court emphasized that if the petitioner failed to comply with this direction, the impugned assessment order would be given effect to. The Court's reasoning was based on the principle that a proper opportunity to substantiate claims, especially concerning ITC, is crucial, and the specific nature of the petitioner's business facilitated verification.

Key Issues

1. Whether the Assistant Commissioner was justified in passing an ex parte assessment order under Section 73 of the CGST Act, disallowing the entire input tax credit claimed by the petitioner for the Financial Year 2019-20, without providing an opportunity to produce books of accounts and other relevant documents? (Question of law and fact, turning on Section 73 of the CGST Act). Petitioner's Contention: The petitioner argued that the ex parte order was passed without affording them an opportunity to explain their claim of input tax credit by producing books of accounts and stock registers. They contended that the Assessing Authority could have easily verified the ITC claim by examining the returns and data available on the portal, especially since their purchases were restricted to a single supplier, Indian Oil Corporation Limited (IOCL), for a commodity meant for PDS distribution. They relied on the principle that material data disclosed in returns should be accepted unless verified otherwise. Revenue's Contention: The judgment records no specific arguments made by the revenue or opposite parties regarding the petitioner's contentions on the ex parte nature of the order or the disallowance of ITC.