Protiva vs. Deputy Commissioner Of State Tax, Ultadanga, Cossipore And Belgachia Charge And Ors.

Held

The Court held that the petitioner had made out a prima facie case warranting interference. While acknowledging the availability of an alternative statutory remedy under Section 107 of the CGST Act, the Court considered the significant amount of tax, interest, and penalty imposed by the impugned order and the medical exigencies pleaded by the petitioner. The Court found that relegating the petitioner to the appellate forum without any protection would cause prejudice. Therefore, the Court decided to dispose of the writ petition by permitting the petitioner to avail the statutory remedy of appeal, subject to specific conditions. The appellate authority was directed to entertain the appeal upon payment of the statutory pre-deposit and a cost of Rs. 30,000/-. The appellate authority was also directed to dispose of the appeal expeditiously and was cautioned not to be influenced by the observations made in the order, but to decide the appeal independently.

Facts

The petitioner, Protiva, a partnership firm, challenged an ex parte order dated January 25, 2024, passed under Section 73 of the CGST Act by the Deputy Commissioner of State Tax. The dispute arose from a discrepancy in input tax credit (ITC) for the financial year 2018-19, where the revenue alleged an excess availment of Rs. 12,54,913.86. The petitioner contended that after accounting for ITC availed in a subsequent year and net claimable amounts, the excess was minimal. A show cause notice was issued on December 4, 2023, under Section 73(1) of the CGST Act. The petitioner failed to file a reply to the show cause notice due to medical exigencies of its partners, leading to the ex parte order under Section 73(9).

Key Issues

1. Whether the ex parte order dated January 25, 2024, passed under Section 73(9) of the CGST Act, is sustainable in law, considering the petitioner's alleged failure to file a reply to the show cause notice due to medical exigencies and a claim of violation of natural justice. Petitioner's arguments: The petitioner argued that the ex parte order suffered from gross irregularities and violated the principles of natural justice as it was passed without affording an adequate and effective opportunity to file a reply to the show cause notice, citing medical exigencies of its partners. The petitioner sought leave to prefer a statutory appeal upon depositing the requisite pre-deposit. Revenue's arguments: The respondent authorities opposed the petitioner's submissions, highlighting the conduct of the petitioner's partners and asserting that ample opportunities were provided to file a reply and attend personal hearings, which the petitioner failed to avail. The revenue also pointed out the efficacious alternative remedy of appeal under Section 107 of the CGST Act.