M/S Kumar Brothers vs. The Union Of INDIA

Held

The Court held that the State's counsel conceded non-compliance with Sub-Section 4 of Section 75 of the CGST Act, 2017. Based on this admitted fact, the Court found that the petitioner had made out a case for interference. Consequently, the impugned actions of the respondents, including the demand order dated May 24, 2023, the appellate order dated November 21, 2024, and related show cause notices and orders, were set aside. The matter was remanded to the concerned authority to proceed afresh from the defective stage, specifically to ensure compliance with Sub-Section 4 of Section 75 of the CGST Act, 2017. The Court directed the petitioner to cooperate and the respondents to provide a due opportunity of hearing within four months. The Court also referred to the Supreme Court's decision in Oryx Fisheries Private Ltd. vs. Union of India & Ors. regarding quasi-judicial functions. The issue of limitation under Section 73(9) & (10) and the validity of the notification extending time limits were not expressly decided but were implicitly rendered moot by the remand on the procedural ground.

Facts

The petitioner, M/s Kumar Brothers, challenged a demand order dated May 24, 2023, issued by the Assistant Commissioner of State Tax, Patna South Circle (Respondent No. 6). This order demanded tax, interest, and penalty totaling Rs. 3,09,76,669.00 for the period July 2017 to March 2018. The petitioner also challenged the Appellate Authority's order dated November 21, 2024, which rejected their appeal on grounds of limitation. The petitioner's primary contentions were that the demand order was time-barred under Section 73(9) & (10) of the BGST/CGST Act, 2017, and that the demand order was passed ex parte without providing a personal hearing as required by Section 75(4) of the BGST/CGST Act, 2017, violating principles of natural justice. The petitioner also challenged a notification extending time limits for passing orders.

Key Issues

1. Whether the demand order dated May 24, 2023, for the period July 2017 to March 2018, is time-barred under Section 73(9) and (10) of the CGST/BGST Act, 2017? The petitioner argued that the proceedings were initiated beyond the prescribed time limits. The revenue did not explicitly argue on this point in the judgment. 2. Whether the demand order dated May 24, 2023, passed by the Assistant Commissioner of State Tax, was violative of the principles of natural justice due to the non-compliance with Section 75(4) of the CGST/BGST Act, 2017, by not providing a personal hearing? The petitioner contended that the order was passed ex parte. The State, through its counsel, conceded non-compliance with Section 75(4) of the CGST Act, 2017. 3. Whether Notification No. 13/2022 CT dated July 5, 2022, extending time limits under Section 73(10) by virtue of powers under Section 168A of the Act, is unjustified? The petitioner argued that such extensions should only be for special circumstances mentioned in Section 168A. The revenue did not explicitly argue on this point in the judgment.