M/S. Cjn Hitech Motors Private Limited vs. Assistant Commissioner (State Tax)

Held

The Court disposed of the writ petition with liberty to the petitioner to file an appeal under Section 107 of the Act by December 10, 2021. The Court directed that if the appeal is filed by the stipulated date, the Appellate Authority shall consider the matter on its merits after providing the petitioner with an opportunity of hearing and pass orders expeditiously. The Court also ordered that the petitioner would not be compelled to deposit the disputed tax amount until the filing of the appeal. The Court did not make a specific finding on the legality of the penalty enhancement or the denial of personal hearing, implicitly leaving these issues to be decided by the Appellate Authority. The primary decision was to allow the petitioner to pursue the statutory remedy of appeal.

Facts

The petitioner, M/s. CJN Hitech Motors Private Limited, filed a writ petition challenging an order in DRC-07 dated August 31, 2021, passed by the Assistant Commissioner (State Tax), Tirupathi-II Circle. This order pertained to tax periods 2018-19 and 2019-20 (up to December 2019). The petitioner argued that the final order imposed a 100% penalty, whereas the initial notice dated April 24, 2021, had proposed a 25% penalty. The petitioner also contended that despite submitting documents, they were not afforded a proper personal hearing as required by Section 75(4) of the AP GST Act, 2017, before an adverse decision was contemplated. The revenue argued that the Appellate Authority has the power under Section 107(11) of the Act to pass any just and proper order, including modifying or annulling the decision.

Key Issues

1. Whether the enhancement of the penalty rate from 25% in the notice to 100% in the final order, without proper justification and opportunity, is illegal and impermissible under the law, particularly in light of Section 75(7) and Section 74(10) of the CGST Act, 2017? 2. Whether the petitioner was denied an adequate opportunity of personal hearing as mandated by Section 75(4) of the AP GST Act, 2017, after submitting documents, thus violating principles of natural justice? Petitioner's Arguments: The petitioner argued that the increase in the penalty rate from the proposed 25% to 100% in the final order was illegal and impermissible. They further contended that after submitting documents, the respondent was obligated under Section 75(4) of the AP GST Act, 2017, to provide a personal hearing before passing an adverse order. The petitioner also raised a concern regarding the Appellate Authority's power to remand the matter under Section 107(11) of the Act, suggesting it might hinder proper justice. Revenue's Arguments: The revenue contended that the petitioner's argument regarding the Appellate Authority's power to remand was erroneous. They asserted that Section 107(11) empowers the Appellate Authority to pass any order it deems just and proper, which includes modifying the penalty or annulling the decision if the grounds for adverse findings are not accepted.