M/S M.R. Metals vs. The Deputy Commissioner (St) (Int)

Held

The Court held that the revised notice in GST DRC-01 dated 30.05.2022 relied on material that was not furnished to the petitioner. The assessment order did not specify the dealers examined to prove fictitious purchases, the toll gates where vehicles did not pass, or the vehicle owners who denied hiring their vehicles. This non-furnishing of crucial material, which formed part of the impugned order, violated the principles of natural justice. Consequently, the impugned order passed by Respondent No.1 in Form DRC-07 dated 20.06.2022 was set aside and the matter was remanded back to the assessing authority. The petitioner was directed to apply for the relied-upon documents within ten days, and the authority was to furnish them within ten days thereafter. The assessing authority was to consider additional objections and pass an order after giving a hearing. The provisional attachment order dated 07.05.2022 was also set aside, with liberty to issue a fresh order if required, following the procedure under Section 83 of the APGST Act. The Court expressly left undecided the specific contention regarding the Joint Commissioner's power to issue the provisional attachment order, as the order was set aside on other grounds.

Facts

The petitioner filed a Writ Petition challenging the provisional attachment of its properties and an assessment order. The petitioner regularly filed returns and paid taxes. Following an inspection, the assessing authority (Respondent No.1) issued a notice (GST DRC-01A) for Rs.11,15,41,133/-. The petitioner filed objections. Subsequently, Respondent No.1 issued a revised notice (GST DRC-01) demanding Rs.22,58,49,854/-, including penalty and interest. The petitioner again submitted an explanation. A further revised notice (GST DRC-01) demanded Rs.28,00,20,392/-, citing the petitioner's failure to produce original invoices, the existence of fictitious dealers, and discrepancies with toll gate records and vehicle owner statements. The petitioner requested 15 days' time to file objections, but no response was received. Respondent No.1 then passed an order (GST DRC-07) stating non-response. Separately, Respondent No.2 provisionally attached the petitioner's bank account (GST DRC-22).

Key Issues

1. Whether the action of the 2nd respondent in provisionally attaching the petitioner’s properties through proceedings in Form GST DRC 22 dated 7.5.2022 was illegal, arbitrary, without authority of law and jurisdiction, and contrary to the provisions of the Act? (Question of law) 2. Whether the order passed by the 1st respondent in Form DRC-07 dated 20.6.2022 was illegal, arbitrary, without authority of law and jurisdiction, contrary to the provisions of the CGST/SGST Act, 2017, and in violation of the principles of natural justice? (Question of mixed law and fact) Petitioner's contentions: The assessment order is bad in law because material relied upon by the assessing authority was not furnished, preventing an appropriate reply. The provisional attachment order under Section 83 of the APGST Act is also bad as the Joint Commissioner lacked the power to issue it, and his explanation was not recorded before issuance. Revenue's contentions: The argument that the Joint Commissioner could not issue the provisional attachment order under Section 83 of the APGST Act is incorrect. The assessment order was passed based on available material, and the Court cannot fault it.