M/S Akbar Ali Mir And Anr vs. The State Of Assam And 3 Ors

Held

The Court held that while the petitioner raised valid contentions regarding procedural irregularities and the lack of opportunity for hearing, these issues could be effectively addressed through the statutory appellate mechanism. The Court noted that Section 107 of the CGST/AGST Act, 2017, provides an adequate and efficacious remedy for assailing the Order-in-Original. Therefore, the writ petition was not entertained at this stage. Regarding the freezing of bank accounts, the Court, drawing parity with a previous order in WP(C) No. 4694/2024, directed that if the petitioner's bank accounts remained frozen and unoperational, the Appellate Authority should permit the filing of the appeal and entertain it without insisting on the pre-deposit, provided the balance in the frozen accounts was equivalent to or more than the required pre-deposit amount. If the balance was insufficient, the petitioner would be allowed to deposit the shortfall. The Court also stipulated that if the freeze was removed during appeal proceedings, the petitioner would need to deposit the pre-deposit amount to continue the appeal. The ratio decidendi is that statutory remedies should be exhausted before approaching the High Court under Article 226, but procedural fairness and financial impediments to accessing justice can be addressed by directing the appellate authority to facilitate the appeal process.

Facts

The petitioner, M/s Akbar Ali Mir, a proprietorship firm engaged in the coal business, challenged an Order-in-Original dated 06.09.2024 passed under Section 74 of the CGST/AGST Act, 2017, and a Summary of Order in Form GST DRC-07. The impugned order pertains to the tax periods April 2022 – March 2024. The petitioner had previously received a Show Cause Notice on 03.04.2023 regarding excess ITC claim of Rs. 45,07,221.34 for April 2022 – March 2023. Subsequently, a Demand-cum-Show Cause Notice was issued on 08.04.2024 by respondent no. 3 for periods 2022-23 and 2023-24, alleging erroneous refunds of Rs. 1,11,23,972/-. The petitioner's bank accounts were frozen on 02.04.2024. The petitioner sought time to respond to the notices, but an Order-in-Original was passed by respondent no. 4 on 06.09.2024 demanding Rs. 2,41,78,961/-.

Key Issues

1. Whether the Adjudicating Authority (respondent no. 4) erred in passing the Order-in-Original dated 06.09.2024 without affording the petitioner an adequate opportunity of hearing, despite the petitioner requesting time to respond to the Demand-cum-Show Cause Notice issued by respondent no. 3 and subsequently not submitting a reply to the notice issued by respondent no. 4 for the same period. 2. Whether the petitioner is entitled to relief regarding the freezing of its bank accounts, which prevents it from depositing the pre-deposit amount required for filing a statutory appeal under Section 107 of the CGST/AGST Act, 2017. Petitioner's arguments: The petitioner contended that the Adjudicating Authority proceeded to pass the Order-in-Original without considering the petitioner's request for time to examine records and file an effective reply. They argued that the issuance of two separate Demand-cum-Show Cause Notices for the same period by different authorities, and the subsequent passing of the order without proper hearing, rendered the order without jurisdiction. The petitioner also highlighted that the freezing of bank accounts since 02.04.2024 impedes their ability to make the statutory pre-deposit for appeal. Revenue's arguments: The judgment records no specific arguments from the revenue regarding the procedural irregularities or the freezing of bank accounts, other than agreeing to a similar direction as granted in a previous case.