M/S Unique Computer & Communication Shop vs. State Of U.P. And Another

This petition is directed against the order dated 08.04.2024 passed by respondent no. 2 for financial year 2018-19, whereby a demand to the tune of Rs. 68,07,953/- has been raised against the petitioner.

The petitioner was issued a show-cause notice dated 10.12.2023 under Section 73 of Goods and Services Tax Act, 2017 (hereinafter referred to as 'the Act') in GST DRC-01 fixing 10.01.2023 for filing reply. The notice, inter alia, called upon the petitioner as to why tax, penalty and interest to the tune of Rs. 45,66,398/- be not imposed. As the said notice was uploaded on 'Additional Notices and Orders' tab, the petitioner, being unaware of the same, could not file any response to the said show-cause notice. A reminder dated 09.03.2024 was issued to the petitioner fixing 17.03.2024 as the date by which the reply could be filed. However, as no appearance was made, the same led to passing of the order dated 08.04.2024 raising the demand as indicated herein above.

Learned counsel for the petitioner made submissions that action of the respondents in raising demand to the tune of Rs. 68,07,953/- which includes penalty to the tune of Rs. 3,40,262/- and interest to the tune of Rs. 32,23,301/- is contrary to the show-cause notice issued to the petitioner and in violation of Section 75(7) of the Act inasmuch the same is beyond the show-cause notice wherein a demand to the tune of Rs. 45,66,398/- against tax, interest and penalty was sought to be recovered.

Further submissions have been made that while issuing the show-cause notice and the reminder, dates of filing reply were fixed, however, in column pertaining to the date of personal hearing, 'NA' was indicated which is also in violation of principles of natural justice. It is prayed that the order impugned, being in violation of provisions of Section 75(7) of the Act and in violation of the principles of natural justice, be set aside and matter be remanded back to the authority to provide opportunity of hearing and pass appropriate order in accordance with law.

Learned Standing Counsel opposed the submissions made. Submissions have been made that the petitioner, despite issuance of notice and reminder, has chosen not to file response and, therefore, passing of the order cannot be said to be in violation of principles of natural justice and, therefore, the petition deserves dismissal. Submissions were made that charging interest and penalty is statutory and, therefore, irrespective of the fact that the same has not been indicated in the show-cause notice, would not take away the power of the authority in demanding the interest and penalty in accordance with law and on that count also, the petition deserves dismissal.

We have considered the submissions made by counsel for the parties and have perused the material available on record.

Provisions of Section 75(7), inter alia, read as under: "(7) The amount of tax, interest and penalty demanded in the order shall not be in excess of the amount specified in the notice and no demand shall be confirmed on the grounds other than the grounds specified in the notice."

A perusal of the above would reveal that Section 75 deals with general provisions relating to determination of tax and sub-section (7) specifically stipulates that the amount of tax, interest and penalty demanded in the order shall not be in excess of the amount specified in the notice and no demand shall be confirmed on the grounds other than the grounds specified in the notice.

Admittedly, in the present case, the show-cause notice merely indicates the amount of Rs. 45,66,398/- as representing the tax, interest and penalty and the demand qua the three components has been raised at Rs. 68,07,953/-, which is ex facie contrary to the provisions of Section 75(7) of the Act.

So far as the plea pertaining to not providing any opportunity of personal hearing is concerned, once it is the case of the petitioner that it was unaware of the issuance of the show-cause notice, the fact that in the notice issued to the petitioner, the date of filing of reply was indicated, looses its significance and it cannot be said that on account of such indication, the notice, on its own, would stand vitiated.

In view of the above discussion, on account of violation of provisions of Section 75(7) of the Act, the order impugned cannot be sustained.

Consequently, the writ petition is allowed. Order dated 08.04.2024 (Annexure-1) is quashed and set aside and the matter is remanded back to the respondent no. 2 to provide an opportunity to the petitioner to file response to the show-cause notice and after providing opportunity of hearing, pass a fresh order in accordance with law. Order Date :- 27.5.2025 AHA/AKShukla (Kshitij Shailendra, J) (Arun Bhansali, CJ) AFZAL HUSAIN ABBASI High Court of Judicature at Allahabad