M/S. Rsm Luxmi Silks vs. Deputy State Tax Officer - I

Facts

The petitioner, M/s.RSM Luxmi Silks, represented by its Proprietor K.Ramalingam, filed a writ petition challenging an order dated 26.12.2023 in Form GST DRC-07, passed by the Deputy State Tax Officer, Srirangam Assessment Circle, Trichy. This order confirmed demands raised in earlier notices (Form GST DRC-01A dated 07.09.2023 and Form - DRC - 01 dated 12.10.2023) for the Financial Year 2017-18, due to the petitioner's failure to respond to these notices. The petitioner claimed to be a small dealer and unaware of the notices uploaded on the GST portal and the subsequent impugned order until the department initiated recovery proceedings. The petitioner also noted that the appeal remedy would be time-barred, citing the Supreme Court decision in M/s. Singh Enterprises vs. Commissioner of Central Excise, Jamshedpur.

Held

The Court held that while the respondent's contention based on the Glaxo Smith Kline Consumer Health Care Limited judgment was noted, the petitioner could be granted partial relief. The Court decided to quash the impugned order dated 26.12.2023 on terms. The petitioner was directed to deposit 25% of the disputed tax within 30 days of receiving the order. The quashed order was to be treated as an addendum to the show cause notices. The petitioner was also required to file a consolidated reply within 30 days. Upon compliance, the respondent was to pass fresh orders on merits after hearing the petitioner, with an expectation that fresh orders would be passed within two months. The Court stipulated that failure to comply with the deposit or reply requirement would result in the withdrawal of the order and dismissal of the writ petition. The ratio decidendi is that procedural fairness and opportunity to be heard can be granted even in cases of non-compliance, subject to certain conditions, to ensure a just adjudication.

Key Issues

1. Whether the impugned order dated 26.12.2023, passed by the respondent in Form GST DRC-07, is arbitrary and illegal, warranting quashing, in light of the petitioner's claim of non-receipt of notices and lack of opportunity for personal hearing? (Question of law and fact, turning on principles of natural justice and procedural fairness under GST law). Petitioner's Arguments: The petitioner argued that the impugned order was arbitrary and illegal because they failed to notice the notices uploaded on the GST portal and were unaware of the final order until recovery action was initiated. They contended that the dispute arose from discrepancies between GSTR-3B and GSTR-2A returns and that they had a good case to explain. They also submitted that the appeal remedy was time-barred, referencing the Supreme Court's decision in M/s. Singh Enterprises vs. Commissioner of Central Excise, Jamshedpur. They sought a direction to redo the adjudication after granting an opportunity of personal hearing. Respondent's Arguments: The respondent, through the Additional Government Pleader, argued that the Writ Petition was devoid of merits, relying on the Supreme Court's decision in Assistant Commissioner (CT), LTU, Kakinada and others vs. Glaxo Smith Kline Consumer Health Care Limited.