M/S Laxmi Barter Private Limited vs. The Union Of INDIA Through The Secretary

Held

The Court quashed and set aside both the summary of order dated March 2, 2020, passed by the Assistant Commissioner of State Tax, and the appellate orders dated August 16, 2021, passed by the Additional Commissioner of State Taxes (Appeals). The Court found the 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 insufficient time afforded to the petitioner. The ex parte nature of the orders and the lack of sufficient reasoning for determining the amount due were also cited as grounds for interference. The Court directed the petitioner to deposit 20% of the demanded amount within four weeks, without prejudice to their rights. The bank accounts of the petitioner were to be de-frozen immediately. 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 of the petitioner's appearance. 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, leaving all issues open.

Facts

The petitioner, M/s Laxmi Barter Private Limited, challenged two sets of orders. The first set, dated March 2, 2020, were summary orders in Form GST DRC-07 issued by the Assistant Commissioner of State Tax, Patna Central Circle, imposing interest on the gross amount without deducting Input Tax Credit (ITC) and allegedly passed without a show cause notice, violating principles of natural justice. The second set of orders, dated August 16, 2021, were passed by the Additional Commissioner of State Taxes (Appeals), Patna West Division, rejecting the petitioner's appeals against the first set of orders, purportedly due to non-receipt of certified copies. Both the initial orders and the appellate orders were ex parte in nature. The petitioner sought quashing of these orders and a restraint on coercive recovery actions.

Key Issues

1. Whether the summary of order issued in Form GST DRC-07 dated 02.03.2020 by the Assistant Commissioner of State Tax, Patna Central Circle, under Section 75 of the GST Act, imposing interest on the gross amount without deducting Input Tax Credit, and passed without a show cause notice, violates the principles of natural justice. 2. Whether the appellate orders dated 16.08.2021, rejecting the petitioner's appeals on grounds of non-receipt of certified copies without proper application of mind, are legally sustainable. Petitioner's Arguments: The petitioner contended that the initial order imposing interest was passed in violation of the principles of natural justice, as no show cause notice was issued, and interest was calculated on the gross amount without considering the already paid Input Tax Credit. The appellate orders were also challenged for being passed without application of mind and on flimsy grounds of non-receipt of certified copies, rendering them ex parte and bad in law. Revenue's Arguments: The Revenue, through its counsel, stated it had no objection if the matter was remanded to the Assessing Authority for a fresh decision on merits, with no coercive steps to be taken against the petitioner during the pendency of the case.