M/S Cement House vs. The Union Of INDIA

Held

The Court held that the impugned assessment orders dated March 6, 2021, and February 6, 2021, and the summary of order dated February 6, 2021, passed in GST DRC-07 for the financial year 2019-20, were bad in law and liable to be quashed. The Court found two primary reasons for this decision: (a) violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing and insufficient time afforded to the petitioner to present their case; and (b) the ex parte nature of the orders, which failed to provide sufficient reasoning for the determination of the amount due and payable by the assessee. The Court emphasized that ex parte orders entailing civil consequences must adhere to natural justice. Consequently, the Court quashed the impugned orders. The petitioner was directed to deposit 20% of the demanded amount within eight weeks, without prejudice to their rights. The bank accounts of the petitioner were to be de-frozen immediately. The petitioner was directed to appear before the Assessing Authority on December 23, 2022, for a fresh assessment on merits, with the Assessing Authority to comply with natural justice principles, afford adequate opportunity, and pass a speaking order within two months. No coercive steps were to be taken during this period. The Court explicitly stated that it had not expressed any opinion on merits, leaving all issues open.

Facts

The petitioner, M/s Cement House Refyuji Colony, through its proprietor Saurav Kumar, filed a writ petition challenging assessment orders dated March 6, 2021, and February 6, 2021, passed by the Assistant Commissioner of State Tax, Saharsa Circle. These orders, along with a GST DRC-07 dated February 6, 2021, were passed ex parte for the financial year 2019-20, imposing a total liability of Rs. 32,00,296/- on the petitioner, comprising CGST and SGST, including interest and penalties. The petitioner sought to quash these orders, direct the refund of Rs. 16,90,722/- seized from their cash credit ledger, and for a fresh assessment considering their GSTR-9 filing. The revenue stated no objection to the matter being remanded for fresh decision on merits, with no coercive steps during pendency.

Key Issues

1. Whether the ex parte assessment orders dated March 6, 2021, and February 6, 2021, and the GST DRC-07 dated February 6, 2021, passed by the Assistant Commissioner of State Tax, Saharsa Circle, for the financial year 2019-20, are liable to be quashed on grounds of violation of principles of natural justice and lack of reasoned adjudication? (Question of law and mixed fact and law) Petitioner's contentions: The assessment orders were passed illegally and ex parte before the filing of GSTR-9, without examining records and supporting materials uploaded on the GST portal. The petitioner argued that insufficient time was afforded for representation, leading to a violation of natural justice. The ex parte orders lacked sufficient reasoning for determining the due amount. Revenue's contentions: The learned counsel for the Revenue stated no objection if the matter is remanded to the Assessing Authority for deciding the case afresh on merits, and that no coercive steps would be taken against the petitioner during the pendency of the case.