M/S B.R. Construction Company vs. Deputy Director
Original PDF →Facts
The petitioner, M/s B.r. Construction Company, filed a writ petition challenging an order dated 29.09.2023 and a show cause notice dated 14.02.2022. The petitioner argued that Section 46 of the Central Goods and Services Tax (CGST) Act was not complied with, as no notice was issued before proceeding under Sections 73 or 74. The petitioner also claimed statements recorded were bad in law and that personal hearings were missed due to family emergencies. The respondents contended that the case did not fall under Section 46 as the petitioner had filed NIL returns. They argued that the proceedings were initiated under Chapter XIV (inspection, search, seizure) and Section 70 of the Act, following search and seizure. The petitioner's statement was recorded, and three opportunities for personal hearing were given, which were not availed. The petitioner had admitted GST liability of approximately ₹1.56 Crores and deposited ₹36 Lacs.
Held
The Court held that the primary contention of the petitioner regarding non-compliance with Section 46 of the CGST Act was not accepted. The Court reasoned that the case was not one where the petitioner failed to furnish a return, but rather had filed NIL returns. Therefore, the requirement to issue a notice under Section 46 was not applicable. The proceedings were initiated under Chapter XIV of the Act, following search and seizure, and a summons under Section 70 was issued, leading to the recording of the petitioner's evidence. The Court found no violation of the principles of natural justice, as the petitioner had admitted their GST liability in their own evidence, and one who gives evidence cannot be cross-examined by their own counsel. The petitioner was afforded three opportunities for personal hearing, and the assessment order was passed thereafter. Consequently, the Court was not inclined to entertain the writ petition. The petitioner was granted liberty to approach the appropriate authority by filing an appeal and raising all objections, with a direction for sympathetic consideration of the time spent in High Court proceedings.
Key Issues
1. Whether the proceedings initiated under Section 73 or 74 of the CGST Act are invalid due to non-compliance with the notice requirement under Section 46 of the CGST Act, especially when the petitioner had filed NIL returns? 2. Whether the statements recorded from the petitioner are bad in law and cannot be relied upon in any proceedings? 3. Whether the principles of natural justice were violated by not affording the petitioner an opportunity for cross-examination and by passing the order without a proper personal hearing? Petitioner's Arguments: The petitioner argued that Section 46 of the CGST Act mandates a notice to registered persons failing to furnish returns, and its non-compliance invalidates proceedings under Section 73 or 74. They contended that the non-obstante clause in Section 62 does not permit bypassing Section 46. The petitioner also argued that statements recorded were inadmissible and that they were denied an opportunity for cross-examination and a proper personal hearing due to unavoidable circumstances. Reliance was placed on the principles of natural justice. Respondents' Arguments: The respondents argued that the case did not fall under Section 46 as the petitioner had filed NIL returns, making the notice requirement inapplicable. They contended that the proceedings were initiated under Chapter XIV and Section 70 of the Act following search and seizure. The petitioner's statement was recorded, and they were given three opportunities for personal hearing, which they failed to utilize. The respondents cited Tanushree Logistics Pvt. Ltd. vs State of Rajasthan & Ors. and argued that the petitioner had admitted their GST liability.
Sections Cited
Section 46, Section 39, Section 44, Section 45, Section 62, Section 73, Section 74, Section 67, Section 70, Section 75(5)
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
Order 30/04/2024
Petitioner has preferred this writ petition inter-alia claiming the following reliefs:-
(2 of 6) [CW-2792/2024] “a. To quash order dated 29.09.2023(Annexure P/7); b. To quash the show cause notice dated 14.02.2022(Annexure P/3); c. To hold that statement recorded on 08.10.2020 & 04.02.2022 are bad in law and cannot be relied upon in any proceedings; d. Any other relief as this Hon'ble court may deem fit and proper in the fact, circumstance and legal position of the case and in law to the petitioner”
It is contended by counsel for the petitioner that petitioner earlier filed a writ petition bearing CWP No.2086/2021 which was withdrawn with liberty to avail remedies in accordance with law to challenge the adjudication. It is also contended that provisions of Section 46 of the Central Goods and Services Tax Act (hereinafter referred as 'Act') were not complied with and notice to the petitioner was not given. Petitioner was registered with the GST authorities and as per Section 46 of the Act, it was mandatory to furnish a notice if a registered person fails to furnish return under Sections 39 or Section 44 or Section 45 of the Act. It is further contended that Section 62 of the Act deals with assessment of non-filers of returns and it has a non-obstante clause, wherein it is mentioned that notwithstanding anything to the contrary contained in Section 73 or Section 74, where a registered person fails to furnish the return under Section 39 or Section 45, even after the service of a notice under Section 46, the proper officer
(3 of 6) [CW-2792/2024] may proceed to assess the tax liability of the said person to the best of his judgment.
It is further contended that since a notice under Section 46 of the Act has not been given to the petitioner, the proper officer could not have proceeded under Section 73 or Section 74 of the Act. It is argued that petitioner was not afforded an opportunity of cross-examination. It is also argued that due to demise of close relatives and illness of close relatives, the petitioner could not appear for compliance of notices given for personal hearing on 14.08.2023, 01.09.2023 and 15.09.2023. It is contended that order has been passed without personal hearing of the petitioner, hence, the matter is required to be remitted back to the Adjudicating Officer for giving opportunity to the petitioner to appear for personal hearing. It is also contended that registration of the petitioner was cancelled by the authorities on 31.08.2019 and the proceedings initiated after search and seizure under Section 67 and 70 of the Act cannot bypass the provisions contained under Sections 46 and 62 of the Act. It is further contended that principles of natural justice have not been followed by the Adjudicating Officer, hence, the present writ petition is maintainable.
Mr. Sandeep Pathak appearing for respondents has vehementally opposed the writ petition. It is contended that assessment order can be challenged by way of appeal. It is also contended that this is not a case under Section 46 of the Act for the very reasons that petitioner had submitted NIL return in the year 2017-2018 and therefore, there was no requirement of giving notice under Section 46 of the Act to the petitioner to furnish his
(4 of 6) [CW-2792/2024] return. It is contended that this is a case under Chapter XIV of the Act which deals with inspection, search, seizure and arrest. Petitioner was given notice under Section 70 of the Act after search and seizure. In pursuance of notice given under Section 70 of the Act, petitioner appeared before the Authorities and his statement was recorded. It is argued that petitioner now cannot argue before the Court that he has a right to cross-examine himself. It is contended that after recording of the statement of the petitioner under Chapter XIV of the Act, notices of personal hearing were given to the petitioner, however, the petitioner did not appear. As per Section 75(5) of the Act, the proper officer shall, if sufficient cause is shown by the person chargeable with tax, grant time to the said person and adjourn the hearing for reasons to be recorded in writing. However, proviso to Sub-Section (5) makes it clear that no such adjournment shall be granted for more than three times to a person for personal hearing during the proceedings. It is contended that petitioner was afforded three opportunities and therefore, in the impugned order, there was no illegality and there was no violation of principles of natural justice.
It is contended that the petitioner himself in his evidence has admitted his GST liability, payable to the tune of Rupees One Crore and Fifty Six Lacs and also deposited Rupees Thirty Six Lacs. He has also admitted his tax liability for the year 2017-2018. The proper alternate remedy is available and petitioner is entitled to place all the objections before the appellate authority. Counsel for the respondent has placed reliance upon Tanushree Logistics Pvt. Ltd. vs State of Rajasthan & Ors:, 2022(12) TR 6736, wherein
(5 of 6) [CW-2792/2024] the Division Bench of this Court was dealing with the case akin to the present one.
We have considered the contentions.
The primary contention of counsel for the petitioner is that provisions of Section 46 of the Act was not complied with and notice was not given to the petitioner who was a registered person. Since there is non-obstante clause under Section 62 of the Act, no proceedings could have taken place under Section 74 of the Act. We are not inclined to accept the said arguments for the very reason that this is not a case where the registered person failed to furnish the return rather, the petitioner has filed the NIL return. Therefore, there was no requirement to give notice to the petitioner under Section 46 of the Act. The present is a case where search and seizure had taken placed under Chapter XIV of the Act and in pursuance of search and seizure, summons were given under Section 70 of the Act to the petitioner to give evidence. Consequently, thereupon the evidence of petitioner was recorded and after recording of evidence, petitioner was afforded three opportunities of personal hearing and thereafter, the present assessment order has been passed. We do not find any violation of principles of natural justice as the petitioner himself has admitted his GST liability in evidence given by him and the person who has himself given evidence, cannot be permitted to be cross-examined by his own counsel. We are of the considered view that since present is a case where there is no violation of principles of natural justice, we are not inclined to entertain the writ petition and the same is accordingly, dismissed.
Stay application also stands disposed.
(6 of 6) [CW-2792/2024]
However, petitioner is free to approach the appropriate authority by filing the appeal and to raise all objections before it.
We also deem it proper to direct the appropriate authority to consider sympathetically the time spent during the proceedings before High Court, if an appeal is filed. (SHUBHA MEHTA),J (PANKAJ BHANDARI),J HEENA/17
Reproduced from the public record of the Rajasthan High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.