M/S Satnam Engine Service vs. State Of Uttar Pradesh And Another

Facts

The petitioner, M/s Satnam Engine Service, filed a writ petition challenging an ex parte demand order dated April 9, 2024, issued by the Deputy Commissioner, State Tax, Bareilly. This order was passed under Section 73 of the Goods and Services Tax Act, 2017, for the Financial Year 2018-19. The petitioner argued that the impugned order did not comply with the requirements of Section 75(6) of the Act, as it failed to set out the relevant facts and the basis of the decision. The respondents, the State of Uttar Pradesh and another, supported the order but did not dispute that the issue was covered by a previous judgment of the Court.

Held

The Court held that the ex parte demand order dated April 9, 2024, was unsustainable. The Court found that, similar to the facts in the cited case of M/s Hari Shanker Transport, the impugned order did not contain any reasons and merely incorporated the indication made in the show cause notice by reference. This failure to set out the relevant facts and the basis of the decision contravened the mandatory requirements of Section 75(6) of the Goods and Services Tax Act, 2017. The Court reiterated that even if no response was filed to the show cause notice, it was incumbent upon the proper officer to pass a self-contained order in compliance with Section 75(6). The ratio decidendi is that an order passed under Section 73 of the GST Act must be a speaking order, detailing the facts and the basis of the decision, and cannot merely refer to previous notices. Consequently, the Court quashed the ex parte order and remanded the matter back to the respondent No.2 to provide the petitioner an opportunity to file a response to the show cause notice within four weeks, followed by a fresh order after providing a hearing.

Key Issues

1. Whether the ex parte demand order dated April 9, 2024, passed under Section 73 of the Goods and Services Tax Act, 2017, is liable to be quashed for non-compliance with Section 75(6) of the Act? Petitioner's contention: The petitioner argued that the impugned order fails to fulfill the requirements of Section 75(6) of the Act, which mandates that the proper officer must set out the relevant facts and the basis of their decision in the order. They relied on the judgment in M/s Hari Shanker Transport Vs. Commissioner of Commercial Tax U.P. to support their claim that the order should be quashed and the matter remanded. Respondent's contention: The respondents attempted to support the impugned order but did not dispute that the issue raised by the petitioner was covered by the precedent case of M/s Hari Shanker Transport.