Shiv Kishor Construction Private Limited vs. The Union Of INDIA

Held

The Court held that one of the impugned orders, specifically the order dated March 2, 2020, was passed in violation of the principles of natural justice. The Deputy Commissioner issued a notice asking for a show cause by a specific date but preponed the decision-making without any prior intimation or affording an opportunity of hearing. This order, having civil and pecuniary consequences, caused prejudice to the petitioner. Therefore, on this ground alone, the order dated March 2, 2020, and the consequential 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 July 29, 2020, at 10:30 AM, and the authority was instructed to comply with the principles of natural justice before passing a fresh order. The Court did not explicitly decide on the applicability of Section 61 in the context of the initial 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 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. 54,40,224.00 for the period October 2018 to March 2019, alleging suppression of supply amounting to Rs. 2,05,11,951.60 by comparing GSTR-3B returns with GSTR-2A. The petitioner argued this order was passed without complying with Section 61 of the GST Act and that the show cause notice, though issued on January 16, 2020, was served via email on January 25, 2020, making it impossible to reply by the January 27, 2020 deadline due to a death in the family and a holiday. The second order, dated March 2, 2020, finalized the demand under Section 74(9), despite a subsequent show cause notice dated February 8, 2020, asking for a reply by March 7, 2020. The petitioner contended this violated natural justice. 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, Patna Central Circle, is without jurisdiction 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 the short period for filing 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, is bad in law and without jurisdiction due to non-compliance with Section 61 of the Central/Bihar Goods and Services Tax Act, 2017, and for gross violation of the principle of natural justice, as it was passed before the stipulated reply date? Petitioner's arguments: The petitioner argued that the initial assessment order was passed without adhering to the mandatory scrutiny process under Section 61. They also contended that the show cause notice was served late, and the subsequent deadline for reply was unreasonably short, especially given a personal tragedy and a public holiday, thus violating natural justice. Regarding the final order, the petitioner asserted it was passed prematurely, before the deadline for their reply, again violating natural justice and the mandatory requirements of Section 61. They sought remand to comply with Section 61. Revenue's arguments: The judgment records no specific arguments from the revenue, but notes that the Additional Solicitor General for the Union of India and the Additional Advocate General for the State of Bihar were present. The State's counsel was described as "extremely fair in his submission."