M/S Sarveshwari Industries And Anr vs. The State Of Assam And 2 Ors

Held

The Court held that while no final decision had been taken by the authorities, the petitioners were entitled to receive complete particulars regarding any alleged deficiency in their GST returns before submitting an effective reply. The Court reasoned that the seriousness of the allegations necessitated full disclosure of the basis for the deficiency. Therefore, the writ petition was disposed of with a direction for the Assistant Commissioner of State Tax (respondent no. 3) to furnish full and better particulars of the alleged deficiency to the petitioners within two weeks of receiving a certified copy of the order. The petitioners were granted at least three weeks thereafter to submit their reply. The Court also directed that no coercive action would be initiated against the petitioners until the exercise of furnishing particulars, submission of reply, and passing of a reasoned order was completed. The issue of whether the notice was maintainable based on external inputs was implicitly addressed by requiring better particulars, and the issue of denial of proper opportunity was resolved by granting time and demanding specifics.

Facts

The petitioners, M/s Sarveshwari Industries and its proprietor Kamal Agarwal, filed a writ petition before the Gauhati High Court challenging a notice dated July 3, 2023, issued by the Assistant Commissioner of State Tax, Guwahati Unit-B. The notice directed the petitioners to show cause within 30 days why an amount of Rs. 1,73,22,888/- should not be levied as unpaid GST dues along with penalty. The petitioners contended that the notice, issued under Section 61 of the GST Act, 2017, was based on external inputs rather than a re-assessment of their filed returns and lacked specific details regarding the alleged deficiencies, thereby denying them a proper opportunity to reply.

Key Issues

1. Whether the notice dated 03/07/2023, issued by the Assistant Commissioner of State Tax under Section 61 of the GST Act, 2017, is maintainable in law if it is based on external inputs and not a re-assessment of filed returns? 2. Whether the impugned notice is vitiated by non-disclosure of the basis of the alleged deficiency in the returns filed by the petitioners, thereby denying them a proper opportunity to make an effective reply? The petitioner argued that the notice, invoking Section 61 of the GST Act, 2017, was not maintainable as its basis was external inputs, not a re-assessment of returns. They further contended that the notice failed to specify the grounds for the alleged deficiency, preventing them from providing an effective reply. The revenue, represented by the departmental counsel, submitted that these issues could be raised before the GST authorities and suggested disposing of the writ petition with a direction for the respondents to consider the petitioners' grievance after examining their show cause reply.