M/S Abhiraj Associates PVT. LTD. vs. The Union Of INDIA

Held

The Court quashed and set aside the impugned order dated September 2, 2022, passed by the Additional Commissioner of State Taxes (Appeals), and the orders dated November 19, 2021, and November 20, 2021, passed by the Assistant Commissioner of State Taxes. The Court found that the initial order was passed in violation of the principles of natural justice due to a lack of fair opportunity of hearing and insufficient reasoning. The appellate order was also found to be bad in law for not adjudicating on the merits. The Court directed the petitioner to deposit 10% of the total demand within four weeks, in addition to the 10% already stated to be deposited. The bank account of the petitioner was 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. 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.

Facts

The petitioner, M/s Abhiraj Associates Pvt. Ltd., challenged two orders: an order dated November 19, 2021, and a summary of order in Form GST DRC-07 dated November 20, 2021, for the period April 2020 to March 2021, which imposed a demand of Rs. 17,56,050/-. The petitioner argued this was done without adjusting available Input Tax Credit and without a show cause notice, violating natural justice. The petitioner also challenged an order dated September 2, 2022, by the Additional Commissioner, State Taxes (Appeals), which rejected their appeal on grounds of 63 days' delay, without considering the merits. The petitioner sought quashing of these orders, a restraint on coercive recovery, and de-freezing of their bank account.

Key Issues

1. Whether the order dated November 19, 2021, and the summary of order dated November 20, 2021, imposing a demand of Rs. 17,56,050/- for the period April 2020 to March 2021, are liable to be quashed for being passed without adjusting available Input Tax Credit and without issuing a show cause notice, thereby violating the principles of natural justice? 2. Whether the order dated September 2, 2022, rejecting the petitioner's appeal on the sole ground of 63 days' delay, without adjudicating on the merits of the case, is sustainable? Petitioner's Arguments: The petitioner contended that the initial demand order was passed in violation of natural justice principles, as no show cause notice was issued and available Input Tax Credit was not adjusted. They further argued that the appellate order was passed mechanically, dismissing the appeal solely on delay without considering the substantive issues. Revenue's Arguments: The Revenue, through its counsel, stated it had no objection if the matter was remanded to the Assessing Authority for fresh decision on merits, with the limitation period not being an impediment, and no coercive steps taken during the pendency.