M/S G.P. Hardware vs. The Union Of INDIA

Held

The Court held that the impugned order dated January 9, 2021, passed by the Additional Commissioner (Appeals) and the order dated February 25, 2020, passed by the Joint Commissioner of State Taxes were bad in law due to a violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing. The Court noted that the petitioner was not afforded sufficient time to represent their case, and the orders were passed ex parte without sufficient reasoning. The Court also acknowledged that the delay in filing the appeal was sufficiently explained due to COVID restrictions. The Court decided to quash and set aside both impugned orders. The Court directed the petitioner to deposit 10% of the total demand before the Assessing Officer within four weeks, in addition to the 10% already deposited for the appeal hearing. The bank accounts of the petitioner were 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 from the petitioner's appearance. The Court explicitly stated that no opinion was expressed on the merits of the case and all issues were left open. The Court also noted that proceedings during the pandemic could be conducted digitally.

Facts

The petitioner, M/s G.P. Hardware, challenged an appellate order dated January 9, 2021, passed by the Additional Commissioner (Appeals), State Goods and Services Tax, Purnia, which rejected their appeal. This appellate order upheld a prior order dated February 25, 2020, passed by the Joint Commissioner of State Taxes, Purnia. The petitioner sought to set aside these orders and prayed for an opportunity of hearing before the adjudicating authority, arguing a violation of natural justice. They also sought to read down Section 16(4) of the Bihar Goods and Services Tax Act, 2017, to allow Input Tax Credit (ITC) for September and October 2018, amounting to Rs. 22,29,011 each under CGST and SGST Credit for Financial Year 2017-18, which was reflected in GSTR-3B, GSTR-9C, and GSTR-2A but not accounted for in the assessment for Financial Year 2018-19. The petitioner claimed the assessment order was passed ex parte before they could file a reply to the show cause notice.

Key Issues

1. Whether the impugned orders passed by the Additional Commissioner (Appeals) and the Joint Commissioner of State Taxes are liable to be set aside on the ground of violation of the principles of natural justice, specifically the denial of a fair opportunity of hearing to the petitioner, as contemplated under the relevant provisions of the Bihar Goods and Services Tax Act, 2017? 2. Whether Section 16(4) of the Bihar Goods and Services Tax Act, 2017, should be read down to permit the petitioner to avail Input Tax Credit (ITC) for September and October 2018, amounting to Rs. 22,29,011 each under CGST and SGST Credit for Financial Year 2017-18, which was reflected in statutory filings but not considered for the Financial Year 2018-19 assessment? Petitioner's arguments: The petitioner contended that they were not afforded sufficient time to represent their case and that the orders were passed ex parte without adequate reasons, violating principles of natural justice. They argued that the ITC for September and October 2018 was reflected in their returns and should be considered for the assessment year 2018-19. They relied on the fact that the assessment order was passed before they could file their reply to the show cause notice. Revenue's arguments: The learned counsel for the Revenue stated they had no objection if the matter was remanded to the Assessing Authority for deciding the case afresh on merits.