M/S Siddharth Advertising vs. The Union Of INDIA

Held

The Court quashed and set aside the impugned orders dated 18.10.2022 (by the Additional Commissioner, State Taxes Appeals) and the summary of orders dated 10.08.2019 and 27.08.2019 (by the Assistant Commissioner of State Taxes). The Court found the original orders to be bad in law due to a violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing and the ex parte nature of the proceedings without sufficient reasoning. The Court also noted that the authorities had not adjudicated the matter on the attending facts and circumstances. The Court directed the petitioner to deposit 10% of the total demand (if not already done) and an additional 10% within four weeks, without prejudice to their rights. The bank account of the petitioner was ordered to be de-frozen immediately. 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 of the petitioner's appearance, preferably through digital mode. 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 the merits of the case, leaving all issues open.

Facts

The petitioner, M/s Siddharth Advertising, filed a writ petition challenging orders dated 10.08.2019 and 27.08.2019 (Form GST DRC-07) issued by the Assistant Commissioner of State Taxes, imposing tax, interest, and penalty for April and May 2019, totaling Rs. 4,37,540.63 and Rs. 93,075.82 respectively. The petitioner argued these orders were passed ex parte without adjusting available Input Tax Credit and without a show cause notice, violating natural justice. The petitioner also challenged the order dated 18.10.2022 by the Additional Commissioner, State Taxes (Appeals), which rejected their appeals on grounds of limitation without considering the merits. The petitioner sought quashing of these orders, a direction to restrain coercive recovery, and de-freezing of their bank account.

Key Issues

1. Whether the Summary of Order-cum-Demand Notices dated 10.08.2019 and 27.08.2019, issued in Form GST DRC-07 for April and May 2019, imposing tax, interest, and penalty without adjusting available Input Tax Credit and without a show cause notice, are in violation of the principles of natural justice and thus liable to be quashed? (Petitioner's contention: Yes, as these orders were passed ex parte, without adequate opportunity to be heard and without considering available ITC, violating principles of natural justice. Revenue's contention: Not recorded, but agreed to remand for fresh decision.) 2. Whether the appellate order dated 18.10.2022, rejecting the petitioner's appeals on the ground of limitation without considering the merits of the case, is sustainable? (Petitioner's contention: No, the appellate authority failed to apply its mind to the merits of the case and wrongly dismissed the appeal solely on limitation. Revenue's contention: Not recorded, but agreed to remand for fresh decision.)