Hriday Kumar Das vs. State Of West Bengal And Ors.

Held

The Court held that the appellate authority's order enhancing the tax liability without following the procedure under Section 107(11) of the Act was not tenable in law and was liable to be set aside. The Court found that the appellate authority had suo motu enhanced the tax liability without issuing a show cause notice or providing an opportunity to the appellant, which is contrary to the statutory mandate. Regarding the correctness of the original order by the adjudicating authority concerning tax liability and penalty, the Court was of the view that the matter should be remanded back to the adjudicating authority due to subsequent events, specifically the closing order dated 22.07.2024, which pertains to the same tax period and amount. The Court set aside both the appellate authority's order and the adjudicating authority's order and remanded the matter for fresh consideration. The adjudicating authority was directed to consider all contentions, including the impact of the closing order, and pass fresh orders on merits. The Court expressly left open all issues for the adjudicating authority to consider afresh, uninfluenced by previous findings or observations.

Facts

The appellant, Hriday Kumar Das, filed an intra-court appeal against an interim order of the High Court that stayed proceedings subject to payment of 10% of the disputed tax. The appellant challenged an order passed by the appellate authority under Section 107 of the WBGST/CGST Act, 2017. The assessing officer had quantified the tax at Rs. 2,58,536.80 but imposed penalty on Rs. 41,83,804.72. The appellate authority, while hearing the appellant's appeal, allegedly enhanced the tax liability without following the procedure under Section 107(11) of the Act. The appellant also raised grounds concerning the merits of the matter, including the erroneous fixation of penalty. A subsequent closing order dated 22.07.2024, pertaining to the same tax period (April 2019 to March 2020), was also brought to the court's attention.

Key Issues

1. Whether the appellate authority was justified in enhancing the tax liability payable by the appellant/assessee in an appeal filed by the assessee without following the procedure under Section 107(11) of the WBGST/CGST Act, 2017? The appellant contended that the appellate authority's enhancement of tax liability without adhering to the prescribed procedure rendered the order untenable. The revenue/State's arguments on this issue are not recorded. 2. Whether the original order of the adjudicating authority, particularly the fixation of penalty on the entire sum of Rs. 41,83,804.72, was justified? The appellant argued that the penalty was erroneously fixed on the entire sum and that penalty itself was not imposable. The revenue/State's arguments on this issue are not recorded. 3. What is the impact of the subsequent closing order dated 22.07.2024 on the present liability and the proceedings before the adjudicating authority? This issue arose due to the appellant's payment of tax for the same period under a different notice, leading to a closing order.