Sanjeev Kishore vs. The Union Of INDIA

Facts

The petitioner, proprietor of Nandraj Fuels, challenged an order-in-appeal dated December 12, 2020, passed by the Additional Commissioner of State Taxes (Appeal), Purnea, which dismissed their appeal solely on the grounds of delay. This appeal was against an assessment order-in-original dated March 5, 2020, passed by the Assistant Commissioner of State Tax, Purnea, and a consequential demand notice. The original order levied tax amounting to Rs. 10,49,285.46, interest of Rs. 73,449.84, and penalty of Rs. 2,40,000, totaling Rs. 13,62,735.29 for the financial year 2018-19. The petitioner also sought to declare Section 16(4) and amended Rule 61(5) of the CGST/BGST Act and Rules, 2017, as ultra vires the Constitution and violative of other provisions, or alternatively, that they are not applicable to their case. The petitioner sought to quash the appellate order, the original assessment order, and the demand notice, and requested a remand of the appeal for a decision on merits.

Held

The Court held that the appellate order dated December 12, 2020, the original assessment order dated March 5, 2020, and the consequential demand notice dated March 5, 2020, were bad in law and liable to be quashed. The primary reasoning was the violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing for the petitioner and the ex parte nature of the original assessment order, which lacked sufficient reasoning. The Court noted that orders entailing civil consequences must adhere to natural justice. The Court accepted the Revenue's statement that they had no objection to remanding the matter for fresh consideration on merits. The Court also directed the de-freezing of the petitioner's bank accounts and stipulated that no coercive steps would be taken against the petitioner during the pendency of the fresh proceedings. The Court explicitly stated that it had not expressed any opinion on the merits of the case and all issues were left open for the Assessing Authority to decide. The Assessing Authority was directed to decide the case on merits after complying with the principles of natural justice and affording adequate opportunity to all parties, preferably within two months from the petitioner's appearance. The Court also noted that the petitioner had undertaken to deposit 10% of the total demand additionally, without prejudice to the rights and contentions of the parties, and that any excess deposit would be refunded. The constitutional validity of Section 16(4) and Rule 61(5) was not decided on merits.

Key Issues

1. Whether the order-in-appeal dated December 12, 2020, dismissing the petitioner's appeal on the grounds of delay in submission, is bad in law, considering the alleged violation of principles of natural justice and the ex parte nature of the original assessment order. 2. Whether Section 16(4) of the Central Goods and Services Tax Act, 2017 (CGST Act) and Rule 61(5) of the Central Goods and Services Tax Rules, 2017, as amended, are ultra vires the Constitution of India (Articles 14, 19(1)(g), 300A) and violative of Section 16(1) and (2) of the CGST Act and the basic structure of the CGST/Bihar Goods and Services Tax Act, 2017. Petitioner's Arguments: The petitioner argued that the appellate order was bad in law due to the violation of principles of natural justice, as they were not afforded a fair opportunity of hearing and the original assessment order was passed ex parte without sufficient reasoning. They also contended that Section 16(4) and amended Rule 61(5) are unconstitutional and ultra vires the parent Act. The petitioner sought to quash the impugned orders and have the matter remanded for a decision on merits. 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, and that no coercive steps would be taken against the petitioner during the pendency of the case. No specific arguments were recorded regarding the constitutional validity of Section 16(4) and Rule 61(5).