Swastik Pesticides LTD. vs. The Assistant Commissioner

Held

The Court held that the facts of the present case are entirely different from the cited precedent, M/s Mahendra Sponge and Power Limited. In the cited case, no final order had been passed, and only a summary show-cause notice was issued, leading the Division Bench to set aside the notice. However, in the present case, a final order dated January 23, 2021 (Annexure-R/11) was passed by the Revenue. The petitioner failed to challenge this final order. Furthermore, the Court noted that the petitioner had knowledge of the final order on December 13, 2021, when participating in proceedings before the Assistant Commissioner, yet the petition was filed on August 31, 2021, and the final order was not challenged even when the respondents filed their return on January 27, 2023. The Court found that a statutory alternative remedy is available to the petitioner to prefer an appeal under Section 107 of the CGST Act, 2017, against the order passed by the Assistant Commissioner of State Tax. Therefore, the Court was not inclined to interfere in the writ petition.

Facts

The petitioner, Swastik Pesticides Ltd., filed a declaration form TRAN-1 on August 25, 2017, claiming Input Tax Credit (ITC) of Central Excise on closing stock against State GST, which was an incorrect claim. The respondents, the Assistant Commissioner and Commissioner of State Tax, initiated proceedings. A summons was issued under Section 70(1) of the CGST Act, 2017, followed by a notice in Form GST ASMT-10 on July 8, 2020. Subsequently, a summary show-cause notice in Form GST DRC-01 was issued on September 7, 2020, demanding Rs. 17.84 lakhs, including State GST of Rs. 10.32 lakhs and interest of Rs. 7.52 lakhs. The petitioner responded, but a summary order in Form GST DRC-07 was passed on January 23, 2021. The petitioner challenged this summary order and subsequent recovery proceedings, seeking directions to open the portal for TRAN-1 revision, allow manual revision, waive interest, withdraw notices, and quash the order and recovery proceedings.

Key Issues

1. Whether the proceedings initiated by the respondents are vitiated due to non-compliance with the procedure contemplated under Sections 73(1), 73(9), and 75(4) of the CGST Act, 2017, specifically the failure to provide an adequate opportunity of hearing after issuing a summary show-cause notice and before passing a summary order? - Petitioner's argument: The respondents failed to comply with the mandatory procedural requirements of the CGST Act, particularly Section 75(4), by issuing a summary order immediately after the summary show-cause notice without providing a proper hearing, thereby vitiating the entire proceedings. Reliance was placed on the Division Bench judgment in M/s Mahendra Sponge and Power Limited vs. Assistant Commissioner State Tax. - Revenue's argument: The petitioner participated in the proceedings, as evidenced by signatures on order sheets dated July 8, 2020, and December 13, 2021. The final order dated January 23, 2021, was appealable under Section 107 of the CGST Act, 2017, and the petition was filed after the petitioner had knowledge of this order, making it liable for dismissal. The petitioner also admitted his mistake, as shown in Annexure-P/13.