M/S Satnam Engine Service vs. State Of U.P. And Another

Facts

The petitioner, M/s Satnam Engine Service, filed a writ petition challenging an ex parte demand order dated 24.07.2024, issued by the Deputy Commissioner, State Tax Jurisdiction Bareilly, Sector-6, Bareilly. This order was passed under Section 73 of the Goods and Services Tax Act, 2017, for the Financial Year 2019-20. The petitioner contended that the order did not comply with the requirements of Section 75(6) of the Act. The respondent, State of U.P. and another, attempted to support 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 24.07.2024 was unsustainable because it did not contain any reasons and merely incorporated the indication made in the show cause notice by reference. This was found to be in violation of Section 75(6) of the Goods and Services Tax Act, 2017, which requires the proper officer to set out the relevant facts and the basis of the decision in the order. The Court noted that even if no response was filed to the show cause notice, it was incumbent upon the authority to pass a self-contained order in compliance with Section 75(6). The reasoning followed the precedent set in M/s Hari Shanker Transport (supra), where a similar order was quashed for lacking the necessary factual basis and reasoning. Consequently, the Court quashed the ex parte order and remanded the matter back to the respondent to provide the petitioner an opportunity to file a response to the show cause notice within four weeks, after which a fresh order in accordance with the law was to be passed.

Key Issues

1. Whether the ex parte demand order dated 24.07.2024, issued 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 failed to fulfill the requirements of Section 75(6) of the Act, which mandates that the proper officer shall set out the relevant facts and the basis of the decision in the order. They relied on the judgment in M/s Hari Shanker Transport Vs. Commissioner of Commercial Tax U.P. (supra) to support their claim that the order was not self-contained and merely referred to previous notices without providing the basis for the decision. Respondent's contention: The respondent attempted to support the order but did not dispute that the issue raised by the petitioner was covered by the judgment in M/s Hari Shanker Transport (supra).