M/S Shashikant Singh vs. The Union Of INDIA

Held

The Court rejected most of the petitioner's contentions, finding the actions of the authorities were not motivated, malicious, or for extraneous considerations. The Court noted that an earlier order dated March 19, 2020, which quantified the demand at Rs. 31,46,273/-, was rectified by a subsequent order dated March 1, 2021, reducing the demand to Rs. 13,78,380/-, indicating an effort to protect both revenue and the assessee. However, the Court found merit in the petitioner's argument that the original order dated March 19, 2020, was passed without affording an adequate opportunity of hearing. The Court specifically noted that the required notices (FORM DRC 01 and DRC 01A) were not uploaded on the GST Portal and the copy of the Gmail receipt did not indicate the petitioner's name, thus the notice could not be considered served. On this ground alone, the Court quashed the original order dated March 19, 2020. The Court directed the petitioner to appear before the Assistant Commissioner of State Tax on September 27, 2021, for a fresh assessment, ensuring compliance with the principles of natural justice. The Court also directed the de-freezing of the petitioner's bank account immediately and ordered the refund of any excess amount recovered.

Facts

The petitioner, M/s Shashikant Singh, challenged a demand order (FORM GST DRC 07) dated March 21, 2020, and an earlier order dated March 19, 2020, issued by the Assistant Commissioner of State Tax, Patna Central, for the tax periods of September 2018, December 2018, and March 2019. The demand, including tax, interest, and penalty, initially amounted to Rs. 31,46,273/-. The petitioner also sought to quash attachment notices issued to third parties, including a bank, for recovery and requested the unfreezing of their bank account. A key grievance was the alleged non-service of crucial notices (FORM DRC 01 and DRC 01A) electronically through the GST Portal, rendering the demand order procedurally flawed. The petitioner argued that the demand was raised without proper opportunity of hearing and that the retrospective amendment of rules and denial of Input Tax Credit (ITC) were illegal.

Key Issues

1. Whether the order dated March 19, 2020, passed by the Assistant Commissioner of State Tax, Patna Central, is liable to be quashed for non-compliance with the principles of natural justice, specifically for not affording adequate opportunity of hearing to the petitioner, as required under the CGST/BGST Act? 2. Whether the retrospective amendment of rules under Section 164(3) of the CGST Act, leading to the demand, is ultra vires and constitutes excessive delegation of legislative power? 3. Whether the petitioner can be denied the utilization of Input Tax Credit (ITC) for the periods September 2018, December 2018, and March 2019, especially when the time limits for filing returns were extended by the revenue authorities? Petitioner's arguments included: lack of proper notice and opportunity of hearing; motivated and malicious actions by authorities; recovery of amounts from the bank account without due process; retrospective amendment of rules being ultra vires; GSTR 3B not being a return under Section 39 of the CGST Act; denial of ITC being violative of Article 265 of the Constitution; and that once ITC is entered in books, it cannot be denied utilization. Revenue's arguments were not explicitly detailed in the provided text, but the Court's rejection of the petitioner's contentions suggests the revenue defended the actions of the authorities.