M/S Sober Agencies vs. The Union Of INDIA

Held

The Court held that the impugned summary of order in Form GST DRC-07 dated March 12, 2020, and the notice to a third person under Section 79(1)(c) dated February 3, 2021, were bad in law due to violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing and the ex parte nature of the orders. The Court found that no sufficient reasons were provided in the orders to justify the determination of the amount due. Consequently, the Court quashed and set aside both the summary of order and the notice. The Court also directed the de-freezing of the petitioner's bank account(s). The petitioner was directed to deposit ten percent of the total amount demanded, if not already deposited, and additionally deposit another ten percent of the demand within four weeks. 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. The Court explicitly stated that it had not expressed any opinion on the merits of the case and all issues were left open. Liberty was reserved for the petitioner to challenge the vires of Section 16(4) of the GST Act in separate proceedings.

Facts

The petitioner, M/s Sober Agencies, sought to quash a summary of order in Form GST DRC-07 dated March 12, 2020, and a notice to a third person under Section 79(1)(c) dated February 3, 2021, both issued by the Assistant Commissioner of State Tax, Patna Central Circle. The petitioner contended that these orders were ex parte and issued in violation of principles of natural justice, as they were not afforded sufficient time to present their case. The Revenue stated it had no objection if the matter was remanded to the Assessing Authority for a fresh decision on merits, and no coercive steps would be taken against the petitioner during the pendency of the case. The Court noted that the orders were ex parte and lacked sufficient reasoning for the determination of the amount due.

Key Issues

1. Whether the summary of order in Form GST DRC-07 dated March 12, 2020, and the notice to a third person under Section 79(1)(c) dated February 3, 2021, issued by the Assistant Commissioner of State Tax, Patna Central Circle, are liable to be quashed on the grounds of violation of principles of natural justice and being ex parte. Petitioner's Contention: The petitioner argued that the impugned orders were passed ex parte without affording them a fair opportunity of hearing and lacked sufficient reasoning, thus violating the principles of natural justice. They sought the quashing of these orders. Revenue's Contention: The Revenue stated it had no objection to the matter being remanded to the Assessing Authority for a fresh decision on merits and agreed that no coercive steps would be taken against the petitioner during the pendency of the case.