M/S. Formative Tex Fab Through Its Partner Ratan Kumar Saraf vs. State Of Gujarat
Held
The Court held that the Form GST DRC-01A dated 23.07.2020, which determined a liability of Rs. 1,07,05,725/- without providing the writ applicant an opportunity of hearing, was unsustainable. The Court noted that the applicant had informed the respondent about his medical condition and subsequent surgery, and had not been given a chance to make good his case. Consequently, the Court quashed and set aside the order in Form GST DRC-01A and remitted the matter back to Respondent No. 4 for fresh consideration. The respondent was directed to fix a date for a de novo hearing, intimate it to the applicant in writing, and after hearing the applicant, pass a fresh order in accordance with the law. Regarding the provisional attachment order (Form GST DRC-22), the Court decided not to disturb it, even though the DRC-01A was quashed. The reasoning was to protect the interest of the revenue during the interregnum period until a fresh order was passed, preventing the creation of third-party rights.
Facts
The writ applicant, M/s. Formative Tex Fab, a registered GST entity engaged in manufacturing knitted fabrics, filed a writ petition challenging orders issued by Respondent No. 4. The applicant received a summons under Section 70(1) of the GST Act, 2017, for recording a statement regarding sale/purchase transactions. The applicant, aged 68 and medically advised not to travel, could not appear on the scheduled date. Subsequently, Respondent No. 4 issued Form GST DRC-01A on July 23, 2020, determining a liability of Rs. 69,25,862/- (later stated as Rs. 1,07,05,725/- in paragraph 5) plus interest and penalty. A provisional attachment order (Form GST DRC-22) was also issued on July 24, 2020, attaching both the factory and residential premises of the applicant.
Key Issues
1. Whether the Form GST DRC-01A dated 23.07.2020, determining a tax liability of Rs. 1,07,05,725/- without providing an opportunity of hearing to the writ applicant, is liable to be quashed and set aside, particularly in light of the applicant's inability to appear due to medical advice and subsequent surgery? (Question of law and fact, turning on principles of natural justice and relevant GST Rules). Petitioner's Contention: The petitioner argued that the DRC-01A was issued without affording them an opportunity to present their case, despite informing the respondent about their medical condition. They contended that all their transactions were legal and free from doubt. Revenue's Contention: The judgment does not explicitly record arguments made by the revenue or State. However, the court's decision to allow the attachment to continue suggests an implicit concern for protecting revenue interests.
Sections Cited
Section 70(1), Rule 142(1A)
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
(PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA)
1 By this writ application under Article 226 of the Constitution of India, the writ applicant, a businessman, has prayed for the following reliefs:
“a) to quash and to set-aside Form DRC 1A dated 23.07.2020 issued by respondent no 4;
b) to quash and set-aside the impugned provisional attachment o
The judgment continues below.
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