M/S Cico Patel Jv (A Joint Venture Unit) vs. The Union Of INDIA

Held

The Court quashed and set aside the impugned order dated January 9, 2021, passed by the Joint Commissioner of State Taxes, North Circle, Patna, and the demand notice issued in Form DRC-07. The Court found the order to be bad in law on two primary grounds: (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 represent their case, and (b) the ex-parte order did not assign sufficient reasons for determining the amount due and payable, failing to adjudicate on the attending facts and circumstances. The Court noted that all issues of fact and law ought to have been dealt with, even in ex-parte proceedings. The Court disposed of the writ petition on mutually agreeable terms, including the petitioner undertaking to deposit 20% of the demand, de-freezing of bank accounts, and a direction for the Assessing Authority 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 expeditiously. The Court explicitly stated that it had not expressed any opinion on the merits of the case and all issues were left open.

Facts

The petitioner, M/s CICO PATEL JV, a joint venture, filed a writ petition challenging an ex-parte order dated January 9, 2021, passed by the Joint Commissioner of State Tax, Patna. The order imposed a demand of Rs. 97,02,298/- on the petitioner as tax, interest, and penalty under Section 73(9) of the BGST Act. This demand was based on excess TDS credit in GSTR 2A of the petitioner's employer, IGIMS, against payments made to the petitioner for the period October 2019 to March 2019. The petitioner contended that they declared a lesser turnover in their GSTR 3B returns for the said period because IGIMS had deducted TDS and withheld part payments due to defects in previous work and non-payment of a portion of invoices. The petitioner argued that they were not provided an adequate opportunity of hearing before the ex-parte order was passed.

Key Issues

1. Whether the ex-parte order dated January 9, 2021, passed by the Joint Commissioner of State Tax, Patna, is liable to be set aside for violation of the principles of natural justice, specifically the right to a fair opportunity of hearing, as contemplated under the BGST Act? 2. Whether the ex-parte order, which imposed a demand of Rs. 97,02,298/- on the petitioner, is bad in law for failing to assign sufficient reasons and adjudicate on the attending facts and circumstances, particularly concerning the petitioner's declared turnover and the reasons for withholding payments by the employer? Petitioner's Arguments: The petitioner argued that the order was passed ex-parte without providing a sufficient opportunity for hearing. They also contended that the demand was raised on the basis of a presumption that they had not declared a lesser turnover, whereas the actual situation involved TDS deduction and withholding of payments by their employer, IGIMS, due to unresolved issues with previous work and partial invoice non-payment, preventing them from declaring the full amount as turnover. The petitioner sought to quash the order and the demand notice. Revenue's Arguments: 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, without the limitation period coming in the way, and that no coercive steps would be taken against the petitioner during the pendency of the case.