M/A Ceat Limited vs. The Union Of INDIA

Held

The Court quashed and set aside the impugned order dated 23.02.2021 issued by the Assistant Commissioner, State Taxes, Patliputra Circle, Patna. The Court found that the order was bad in law on two grounds: (a) violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing and insufficient time afforded to the petitioner, and (b) the ex parte order did not assign sufficient reasons for determining the amount due. The Court accepted the revenue's statement that the matter could be remanded for a fresh decision. The Court directed the petitioner to deposit ten percent of the total demand amount (if not already deposited) and an additional ten percent of the demand before the Assessing Officer within four weeks. These deposits were to be without prejudice to the rights of the parties and subject to the final order. The Court also directed the de-freezing of the petitioner's bank accounts. The petitioner was directed to appear before the Assessing Authority on 15th August 2021, and 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. The Court also noted that proceedings during the pandemic could be conducted through digital mode if possible.

Facts

The petitioner, CEAT Limited, filed a writ petition before the Patna High Court challenging an order dated 23.02.2021 issued by the Assistant Commissioner, State Taxes, Patliputra Circle, Patna. This order, in the form of DRC-07, imposed a demand of Rs. 42,07,504, comprising Rs. 34,62,162 as CGST/GST/IGST and Rs. 7,45,342 as interest. The petitioner sought to quash this order and prayed for a fresh decision by the respondent authority, adhering to the principles of natural justice. The petitioner also sought to declare Rule 36(4) of the Central Goods and Service Tax Rules, 2017, as null and void. 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, and no coercive steps would be taken against the petitioner during the pendency of the case.

Key Issues

1. Whether the impugned order dated 23.02.2021, issued by the Assistant Commissioner, State Taxes, Patliputra Circle, Patna, is liable to be quashed and set aside on grounds of violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing and insufficient time afforded to the petitioner to represent its case? 2. Whether the impugned order, being ex parte in nature, sufficiently assigns reasons for determining the amount due and payable by the assessee? 3. Whether Rule 36(4) of the Central Goods and Service Tax Rules, 2017, is null, void, and ultra vires of Sections 16 and 42 of the Central Goods and Service Tax Act, 2017? Petitioner's Arguments: The petitioner argued that the impugned order was passed in violation of the principles of natural justice, as it was not afforded a fair opportunity of hearing and insufficient time was given to present its case. The order was also alleged to be ex parte and lacked sufficient reasoning. The petitioner also challenged the validity of Rule 36(4) of the CGST Rules, 2017. Revenue's Arguments: The learned counsel for the Revenue stated that they had no objection if the matter was remanded to the Assessing Authority for deciding the case afresh on merits, and that no coercive steps would be taken against the petitioner.