Tvl. Vibis Natural Bee Farms vs. The Deputy State Tax Officer - 1

Facts

The petitioner, Tvl.Vibis Natural Bee Farms, filed four writ petitions challenging assessment orders passed by the Deputy State Tax Officer-1 for the assessment years 2018-19 to 2021-22. The total demand disputed across these years amounts to Rs. 29,85,927. The petitioner claimed to be a small operator unaware of the notices preceding the assessment orders, leading to their failure to participate in the proceedings. They also stated they were unaware of the impugned orders until later. The petitioner's primary contention was that the sale of live honey bees is exempt from GST, and the tax demanded on packing materials associated with this exempt supply was incorrect. The respondent argued for dismissal due to latches and time-barred appellate remedies.

Held

The Court held that the petitioner had made out a prima facie case. It was of the view that live honey bees traded by the petitioner might be exempt from GST as per Schedule 1 of the GST Act, 2017. Furthermore, the packing materials were considered part of a composite supply with the exempted product, as defined under Section 2(30) read with Section 8(a) of the GST enactments. While acknowledging the petitioner's neglect in responding to notices, the Court found merit in the petitioner's contentions warranting interference. Consequently, the impugned orders were set aside on terms. The petitioner was directed to deposit Rs. 1,00,000/- to the credit of the respondent within 30 days. The impugned orders were to be treated as addendums to the show cause notices, and the petitioner was to file a reply within 30 days of receiving the order, along with the deposit. The respondent was then directed to pass fresh orders on merits and in accordance with law within two months, ensuring the petitioner was heard.

Key Issues

1. Whether the assessment orders passed for the years 2018-19 to 2021-22 are liable to be quashed due to the petitioner's alleged lack of awareness of the proceedings and the impugned orders, and if so, whether the respondent should be directed to redo the assessment proceedings. (Mixed question of law and fact, concerning principles of natural justice and procedural fairness under the GST Act, 2017). Petitioner's arguments: The petitioner argued that their failure to participate was due to a lack of awareness of the notices and orders. They contended that the sale of live honey bees is exempt under Schedule 1 of the GST Act, 2017, and the tax levied on packing materials, which are part of a composite supply with the exempt product, is illegal. They relied on Section 8(a) of the GST enactments regarding composite supply and expressed willingness to comply with court-imposed conditions to present their case afresh. Respondent's arguments: The respondent argued that the writ petitions should be dismissed on grounds of latches, citing the Supreme Court decision in Assistant Commissioner (CT) LTU, Kakinada and others vs. Glaxo Smith Kline Consumer Health Care Limited. They also contended that the appellate remedy under Section 107 of the GST Enactments was time-barred, referencing Singh Enterprises Vs. Commissioner of Central Excise, Jamshedpur and others.