M/S.Sri Srinivasa Lorry Transport vs. The Assistant Commissioner (St)

Held

The Court held that Section 75(5) of the CGST Act, 2017, only places an outer limit on the number of adjournments and does not mandate a minimum of three adjournments. Regarding the opportunity of hearing, the Court found that while the petitioner received the show-cause notice and requested an adjournment, there was no material to show further requests for adjournment. However, the Court noted that Section 75(4) of the CGST Act, 2017, mandates an opportunity of hearing if an adverse decision is contemplated, even without a specific request. Since the show-cause notice only provided for written objections and no personal hearing was granted, the assessment order was set aside. The Court also held that the 1st respondent, as the Assistant Commissioner (ST) of the territorial circle (Addanki Circle, later merged into Ongole-1 circle), was the appropriate assessing authority under Section 63 of the CGST Act, 2017, and did not require prior authorization for assessment proceedings. Consequently, the Court did not deem it necessary to decide on the DIN number issue. The assessment and penalty orders were set aside, with liberty to the respondent to undertake fresh assessment proceedings after granting a personal hearing to the petitioner.

Facts

The petitioner, M/s. Sri Srinivasa Lorry Transport, was inspected on 07.11.2019, at which time it was not registered under the APGST Act, 2017 or CGST Act, 2017. A show-cause notice was issued on 17.12.2019, received by the petitioner on 26.12.2019. The petitioner requested time to file objections on 04.01.2020, which was received on 21.01.2020. An assessment order was passed on 21.09.2020, and a penalty order on 09.11.2020. The petitioner filed objections in October 2020, after the assessment order was passed. The petitioner challenged these orders through two writ petitions: WP No. 5456/2021 for the assessment order and WP No. 5385/2021 for the penalty order.

Key Issues

1. Whether the petitioner was granted an adequate opportunity of hearing, considering the assessment order was passed before objections were filed and no personal hearing was granted, as required by Section 75(4) of the CGST Act, 2017? 2. Whether Section 75(5) of the CGST Act, 2017, mandates three adjournments before an order can be passed? 3. Whether the assessment order and penalty order are invalid due to the absence of prior authorization under Section 67 of the CGST Act, 2017, for the inspecting officer to conduct assessment proceedings, given the officer's territorial jurisdiction? Petitioner's arguments: The petitioner contended that they were not granted an adequate opportunity of hearing as the assessment order was passed before their objections could be filed. They argued that Section 75(5) of the CGST Act, 2017, requires three adjournments before an order can be passed, which were not granted. Furthermore, they argued that the inspecting officer lacked the necessary prior authorization under Section 67 of the CGST Act, 2017, to conduct assessment proceedings, as the officer was not the proper territorial assessing authority. Revenue's arguments: The Revenue argued that Section 75(5) only sets an upper limit on adjournments and does not mandate three adjournments. They stated that prior authorization under Section 67 was obtained for the inspection on 05.11.2019, and no separate authorization is required for assessment proceedings by the territorial assessing authority under Section 63 of the CGST Act, 2017. They also argued that the requirement of DIN numbers is substantially complied with if portal-generated numbers are present on the orders.