Shiv Kishor Construction Private Limited vs. The Union Of INDIA Through The Principal Chief Commissioner Of Central Tax

Held

The Court held that the order dated March 2, 2020, passed by the Deputy Commissioner of State Tax, Patna Central Circle, was in gross violation of the principles of natural justice. The authority issued a show cause notice with a specific reply date but preponed the decision-making process without any prior intimation or affording an opportunity of hearing to the petitioner. This premature decision, entailing civil and pecuniary consequences, caused prejudice to the petitioner. Consequently, on this ground alone, the order dated March 2, 2020, and the resultant order dated March 4, 2020 (DRC-07), were quashed and set aside. The matter was remanded back to the authority for fresh consideration. The Court directed the petitioner to appear before the authority on October 12, 2020, at 10:30 AM. The authority was instructed to comply with the principles of natural justice and pass a fresh order, considering all issues raised by the petitioner, including those agitated in the writ petition. The Court did not specifically address the arguments regarding Section 61 of the GST Act or the first order dated January 31, 2020, as the decision was based on the violation of natural justice concerning the second order.

Facts

The petitioner, Shiv Kishor Construction Private Limited, challenged two orders passed by the Deputy Commissioner of State Tax, Patna Central Circle. The first order, dated January 31, 2020, assessed tax, interest, and penalty of Rs. 38,72,760.00, alleging suppression of supply amounting to Rs. 1,05,59,962.00 for the period April 2019 to June 2019, by comparing GSTR-3B returns with GSTR-2A. The petitioner contended this order was passed without complying with Section 61 of the GST Act and that the show cause notice, ordered on January 16, 2020, was served on January 25, 2020, with the reply due on January 27, 2020, a period insufficient due to a death in the consultant's family and a holiday. The second order, dated March 2, 2020, finalized the demand at Rs. 39,21,914/-. The petitioner argued this order violated principles of natural justice as it was passed before the reply date of March 7, 2020, and also without complying with Section 61. A consequential DRC-07 notice dated March 4, 2020, directed payment by March 7, 2020.

Key Issues

1. Whether the order dated January 31, 2020, passed by the Deputy Commissioner of State Tax, Patna Central Circle, under Section 74(1) of the Bihar Goods and Services Tax Act, 2017, is liable to be set aside for non-compliance with the mandatory provisions of Section 61 of the Central/Bihar Goods and Services Tax Act, 2017, and for violation of principles of natural justice due to insufficient time to file a reply to the show cause notice? 2. Whether the order dated March 2, 2020, passed by the Deputy Commissioner of State Tax, Patna Central Circle, under Section 74(9) of the Central Goods and Services Tax Act, 2017, is liable to be set aside for violation of principles of natural justice, as it was passed before the stipulated reply date? Petitioner's Arguments: The petitioner argued that both impugned orders were passed without complying with the mandatory requirement of Section 61 of the GST Act, which pertains to the scrutiny of returns. They further contended that the first order was procedurally flawed due to the short notice period for filing a reply, exacerbated by a personal tragedy and a national holiday. The second order was fundamentally flawed as it was passed prematurely, violating the principles of natural justice. The petitioner also claimed that the difference in supply figures included non-GST items like petrol and diesel, and that no evasion, concealment, or suppression of supply had occurred. Revenue's Arguments: The judgment records that the learned counsel for the State, Sri Vikash Kumar, was "extremely fair in his submission." It is not recorded that the revenue presented any specific arguments against the petitioner's claims regarding procedural violations or the merits of the case.