Shiv Kishor Construction Private Limited vs. The Union Of INDIA

Held

The Court held that the order dated March 2, 2020, passed by the Deputy Commissioner of State Tax, Patna Central Circle, Bihar, Patna, was in gross violation of the principles of natural justice. The authority issued a notice asking the petitioner to show cause by a particular date but preponed the decision date without any prior intimation or affording an opportunity of hearing. This order, having 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, allowing the petitioner to raise all issues, including those agitated in the writ petition, which the officer would be obliged to decide. The Court did not specifically address the arguments regarding Section 61 for the first order dated January 31, 2020, as the decision was based on the violation of natural justice in the subsequent 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, under Section 74(1) of the Bihar Goods and Services Tax Act, 2017, assessed tax, interest, and penalty at Rs. 22,12,164.00. This was based on a discrepancy between the petitioner's GSTR 3B returns (July 2019 to October 2019) showing supplies of Rs. 31,761,924.10 and GSTR 2A showing supplies of Rs. 40,432,978.00, indicating a suppressed supply of Rs. 8,671,054.00. The petitioner argued this order was passed without complying with Section 61 and that the show cause notice served via email on January 25, 2020, with a reply due on January 27, 2020, was insufficient given the death of the tax consultant's father and a national holiday. The second order, dated March 2, 2020, under Section 74(9), finalized the demand at Rs. 21,65,482.00, despite the show cause notice directing a reply by March 7, 2020. A consequential DRC-07 was issued on March 4, 2020.

Key Issues

1. Whether the order dated January 31, 2020, passed by the Deputy Commissioner of State Tax 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 inadequate time to respond to the show cause notice? 2. Whether the order dated March 2, 2020, passed by the Deputy Commissioner of State Tax under Section 74(9) of the Central Goods and Services Tax Act, 2017, is liable to be set aside for gross violation of the principles of natural justice, specifically for preponing the decision date without prior intimation and affording no opportunity of hearing? Petitioner's Arguments: The petitioner contended that the impugned orders were passed without complying with the mandatory requirement of Section 61 of the Central/Bihar Goods and Services Tax Act, 2017, as the dispute related to the scrutiny of returns. They also argued that the show cause notice was served late and the period for filing a reply was insufficient due to personal tragedy and a national holiday, violating principles of natural justice. Furthermore, the final order was passed before the stipulated reply date, also violating natural justice. Revenue's Arguments: The judgment records that the learned counsel for the State was fair in his submission and did not dispute that one of the impugned orders was passed in violation of principles of natural justice.