M/S Shaurya And Company A Proprietorship Firm vs. The Union Of INDIA Through The Secretary Department Of Revenue

Held

The Court quashed and set aside the appellate order dated August 18, 2021, and the assessment order dated December 30, 2020, along with the summary of order in Form GST DRC-07. The Court found the assessment order to be bad in law due to violations of the principles of natural justice, specifically the lack of a fair opportunity of hearing and insufficient reasoning. The Court also noted that the authorities had not adjudicated the matter on the attending facts and circumstances. The Court accepted the petitioner's statement regarding the deposit of ten percent of the total amount as a prerequisite for appeal hearing and directed the petitioner to deposit an additional ten percent of the demand within four weeks. The Court also directed the de-freezing of the petitioner's bank account(s). The Assessing Authority was directed to decide the case on merits after complying with the principles of natural justice, affording adequate opportunity to all parties, and passing a speaking order within two months. No coercive steps were to be taken against the petitioner during this period. The Court explicitly stated that it had not expressed any opinion on merits and all issues were left open.

Facts

The petitioner, M/s Shaurya and Company, challenged assessment orders and subsequent appellate orders passed by various State Tax authorities. The initial assessment order dated December 30, 2020, issued by the Assistant Commissioner of State Tax, imposed a cumulative liability of Rs. 33,70,165.79 for the period April 2019 to March 2020, including tax, interest, and penalty. The petitioner's appeal against this order was rejected by the Additional Commissioner of State Tax (Appeals) on August 18, 2021, on grounds of limitation. The petitioner sought to quash these orders and sought directions for refund of pre-deposits and excess IGST paid, as well as permission to amend returns. The revenue, through its counsel, agreed to a remand for fresh adjudication on merits, waiving the limitation issue and agreeing to refrain from coercive steps.

Key Issues

1. Whether the appellate order dated August 18, 2021, rejecting the petitioner's appeal on grounds of limitation, is sustainable in law, considering the principles of natural justice and the ex-parte nature of the assessment order? 2. Whether the assessment order dated December 30, 2020, passed by the Assistant Commissioner of State Tax, is vitiated by a violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing and insufficient reasoning? 3. Whether the petitioner is entitled to a refund of the pre-deposit amount and excess IGST paid, and permission to amend its GSTR-3B return for February 2020? Petitioner's Arguments: The petitioner contended that the assessment order was passed ex-parte without sufficient opportunity for hearing and lacked adequate reasoning. The appellate authority's rejection of the appeal on limitation grounds was also challenged. The petitioner sought directions for refund of pre-deposit and excess IGST, and permission to amend returns. Revenue's Arguments: The Revenue stated it had no objection if the matter was remanded to the Assessing Authority for fresh adjudication on merits, with the limitation not coming in the way, and no coercive steps being taken against the petitioner during the pendency of the case.