M/S Hiraman Prasad vs. The Union Of INDIA

Facts

The petitioner, M/s Hiraman Prasad Nadaon, challenged summary orders in Form GST DRC-07 dated March 19, 2020, and March 9, 2020, for December 2018 and July 2019, respectively. These orders imposed tax, interest, and penalty totaling Rs. 2,41,380/- and Rs. 1,22,232/- without adjusting available Input Tax Credit and allegedly without a show cause notice, violating natural justice. The petitioner's appeals against these orders were rejected by the Additional Commissioner of State Taxes (Appeals) on September 18, 2021, and September 7, 2021, for failing to file certified copies of the assessment orders. The petitioner sought quashing of these orders and a direction to restrain coercive recovery actions.

Held

The Court quashed and set aside the impugned orders dated September 18, 2021, and September 7, 2021, passed by the Additional Commissioner of State Taxes (Appeals), and the orders dated March 19, 2020, and March 9, 2020, passed by the Assistant Commissioner of State Taxes. The Court found the initial orders to be bad in law due to a violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing and the ex-parte nature of the orders without sufficient reasoning. The Court also noted that the authorities had not adjudicated the matter on the attending facts and circumstances. The Court 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. The petitioner was directed to deposit ten percent of the total demand within four weeks, in addition to any amount already deposited, without prejudice to the rights of the parties. Bank accounts were to be de-frozen. No coercive steps were to be taken against the petitioner during the pendency of the proceedings. The Court explicitly stated that it had not expressed any opinion on the merits of the case, leaving all issues open.

Key Issues

1. Whether the summary orders in Form GST DRC-07, imposing tax, interest, and penalty for December 2018 and July 2019, were liable to be quashed for allegedly 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 appellate orders rejecting the petitioner's appeals on the ground of non-filing of certified copies of assessment orders, without considering the merits, were liable to be quashed? Petitioner's Arguments: The petitioner contended that the initial summary orders were passed in violation of natural justice principles, specifically by not issuing a show cause notice and not adjusting available Input Tax Credit. They further argued that the appellate orders were passed without application of mind, solely on a procedural technicality (non-filing of certified copies of assessment orders), and failed to address the merits of the case. Revenue's Arguments: The learned counsel for the Revenue stated they had no objection if the matter was remanded to the Assessing Authority for a fresh decision on merits, with no objection to the limitation period not coming in the way, and no coercive steps being taken against the petitioner during the pendency of the case.