M/S Shivam Enterprise vs. The State Of Bihar

Held

The Court held that the order passed by the respondent authorities was based on the petitioner's acceptance of wrongly availing and utilizing input tax credit during 2017-18. Therefore, the Court found it unnecessary to delve into the issue of notice service, as the petitioner had submitted a reply which was considered. Regarding the grievance of a mandatory personal hearing under Section 75(4), the Court found the plea unfounded. The Court noted that the petitioner had submitted a reply accepting the wrong availment of input tax credit, and the demand order was based on this admission. The Court found the petitioner's subsequent claim in the rejoinder, alleging a mistake by their representative due to lack of knowledge, to be bald and lacking confidence. The Court concluded that the Proper Officer had raised a demand solely for interest on the wrongly availed input tax credit, in terms of Section 50(3) of the BGST Act, 2017, and no penalty was imposed. Consequently, the Court found no reason to exercise its power of judicial review and dismissed the writ application.

Facts

The petitioner, M/s Shivam Enterprise, challenged a demand order and summary of demand order (DRC-07) issued by the Assistant Commissioner of State Tax, Danapur Circle. The impugned orders, dated 19.08.2019, demanded a total of Rs. 4,53,833/- for the period July 2017 to March 2018, comprising tax, interest, and penalty. The petitioner argued that the demand order was passed without a proper personal hearing notice, in violation of Section 75(4) of the BGST/CGST Act, 2017, and without issuing GST ASMT-10 prior to the show cause notice, contravening Section 61 read with Rule 99. The petitioner also contended that the show cause notice and its summary were unsigned or not digitally signed, violating Rule 26(3) and Rule 142(1). The revenue contended that the petitioner had accepted the wrong availment of transitional credit amounting to Rs. 3,45,120/- through an online submission, making the grievance about notice format insignificant. The revenue stated that the order was passed after considering the petitioner's submission and that only interest, not penalty, was imposed.

Key Issues

1. Whether the demand order and summary of demand order were passed in violation of Section 73(9) and Section 75(4) of the BGST/CGST Act, 2017, and principles of natural justice due to the absence of a proper personal hearing notice and prior issuance of GST ASMT-10? 2. Whether the show cause notice and its summary, issued without digital signatures and in violation of Rule 26(3) and Rule 142(1) of the BGST/CGST Rules, 2017, are liable to be quashed? Petitioner's arguments: The petitioner argued that the demand order was passed without affording a proper personal hearing as mandated by Section 75(4) of the BGST/CGST Act, 2017, and that no GST ASMT-10 was issued prior to the show cause notice, violating Section 61 read with Rule 99. They also contended that the show cause notice and the demand order summary were not digitally signed, contravening Rule 26(3) and Rule 142(1). The petitioner further argued that the dates fixed for filing replies and personal hearings were the same, which is not in consonance with Section 75(4). Revenue's arguments: The revenue argued that the writ application was based on frivolous and misleading facts. They asserted that the demand notice was issued after the petitioner accepted, via online submission, the wrong availment of transitional credit. The revenue contended that the petitioner had submitted a response to the show cause notice, which was considered, and that the order was passed based on this acceptance. They also stated that the order was system-generated and digitally signed, and that only interest, not penalty, was imposed under Section 50(3) of the GST Act, 2017.