M/S. Shiv Coal Trading vs. The Union Of INDIA

Held

The Court quashed and set aside the impugned assessment order dated December 24, 2019, the DRC-07 dated December 24, 2019, and the appellate order dated February 24, 2021. The Court found that the orders were bad in law due to a violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing and insufficient time afforded to the petitioner. The Court also noted that the orders did not provide sufficient reasoning for determining the amount due. The Court accepted the petitioner's statement that 10% of the total demand had been deposited and directed the petitioner to additionally deposit another 10% within four weeks. The Court ordered the de-freezing of the petitioner's bank account and directed the Assessing Authority to decide the case afresh 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 opinion was expressed on the merits of the case, and all issues were left open.

Facts

The petitioner, M/s. Shiv Coal Trading, challenged an assessment order dated December 24, 2019, passed by the Assistant Commissioner of State Tax under Section 73 of the CGST Act, 2017, for the first quarter of FY 2019-20 (April to June 2019). This order raised a demand of Rs. 11,36,046.52, including CGST, SGST, and cess, along with interest. The petitioner's appeal against this order was rejected by the Additional Commissioner of State Taxes (Appeals) on February 24, 2021. Subsequently, a recovery letter was issued to the petitioner's bank, Federal Bank, to recover Rs. 10,30,661/- from their account. The petitioner sought to quash these orders and the recovery proceedings, arguing a violation of natural justice and procedural errors.

Key Issues

1. Whether the assessment order dated December 24, 2019, passed under Section 73 of the CGST Act, 2017, and the subsequent appellate order dated February 24, 2021, are liable to be quashed on grounds of violation of principles of natural justice and lack of sufficient reasoning? (Question of law and mixed fact and law). Petitioner's arguments: The petitioner contended that they were not afforded a fair opportunity of hearing and were not given sufficient time to represent their case. They also argued that the orders lacked sufficient reasoning to determine the amount due. Furthermore, the petitioner claimed to have already paid the tax liability by filing tax returns, including an amended return, and sought the refund of Rs. 1,05,386/- deposited during the appeal process. They also sought the de-freezing of their bank account. Revenue's arguments: The Revenue stated they had no objection if the matter was remanded to the Assessing Authority for a fresh decision on merits, without limitation being an impediment, and that no coercive steps would be taken against the petitioner during the pendency of the case.