M/S M/S Cico Patel Jv vs. The Union Of INDIA

Held

The High Court quashed and set aside the ex-parte order dated February 10, 2021, passed by the Joint Commissioner of State Tax, North Circle, Patna. The Court found the order to be bad in law on two primary grounds: (a) violation of the principles of natural justice due to insufficient opportunity of hearing afforded to the petitioner, and (b) the ex-parte order lacked sufficient reasoning for determining the amount due and payable by the assessee. The Court noted that such orders, entailing civil consequences, cannot be sustained when passed in violation of natural justice. The Court directed the petitioner to deposit ten percent of the demanded amount within four weeks, without prejudice to their rights. The bank accounts of the petitioner were ordered to be de-frozen. 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 from the petitioner's appearance. No opinion was expressed on the merits of the case, and all issues were left open.

Facts

The Petitioner, M/s CICO Patel JV, challenged an ex-parte order dated February 10, 2021, passed by the Joint Commissioner of State Tax, North Circle, Patna. The order rejected the Petitioner's Input Tax Credit (ITC) claim for the financial year 2018-19, stating that the claimed ITC of Rs. 2,68,01,602 (CGST and BGST) did not reflect in GSTR-2A, which showed only Rs. 99,60,555. Consequently, a demand of Rs. 3,70,50,310, including tax, interest, and penalty under Section 73(9) of the BGST Act, was imposed. The Petitioner also contended that an additional tax was imposed based on a presumption of undeclared turnover, despite TDS deductions by their employer and pending issues with previous work. The Petitioner sought to set aside this order and the demand notice.

Key Issues

1. Whether the ex-parte order dated February 10, 2021, passed by the Joint Commissioner of State Tax, North Circle, Patna, is liable to be set aside for violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing to the petitioner, as provided under the relevant GST provisions? 2. Whether the ex-parte order, which imposed a demand of Rs. 3,70,50,310, is bad in law due to insufficient reasoning regarding the determination of the amount due and payable by the assessee? Petitioner's Arguments: The Petitioner argued that the impugned order was passed ex-parte without providing a sufficient opportunity to be heard, thus violating principles of natural justice. They also contended that the demand was based on presumptions and insufficient grounds. Revenue's Arguments: The Revenue, through the learned counsel for the Revenue, stated that they had no objection if the matter was remanded to the Assessing Authority for a fresh decision on merits. They also agreed that no coercive steps would be taken against the petitioner during the pendency of the case.