M/S Shree Murliwala Textile A Proprietorship Concern vs. The Union Of INDIA

Facts

The Petitioner, M/s Shree Murliwala Textile, challenged orders passed by the Assistant Commissioner of State Taxes and the Additional Commissioner of State Taxes (Appeal). The Assistant Commissioner issued a demand order dated 20.02.2021, confirmed by a summary of order dated 22.03.2021, for the tax period April 2019 to March 2020, demanding a total of Rs. 7,60,617.78 (Tax, Interest, and Penalty). The Petitioner's appeal against this order was rejected by the Additional Commissioner on 14.09.2021, with a consequent Form GST APL-2 dated 15.09.2021, solely on the ground of non-submission of a certified copy of the impugned order. The Petitioner sought to quash these orders and stay their operation.

Held

The Court quashed and set aside the impugned order dated 14.09.2021 passed by the Additional Commissioner of State Taxes (Appeal) and the consequent Form GST APL-2 dated 15.09.2021, as well as the order dated 22.03.2021 and the summary of order (demand order issued in FORM GST DRC 07) dated 20.02.2021 passed by the Assistant Commissioner of State Taxes. The Court found the original order to be bad in law due to violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing and insufficient reasoning in the ex parte order. The Court also noted that the authorities had not adjudicated the matter on the attending facts and circumstances. The Court accepted the petitioner's statement regarding the deposit of ten percent of the total demand and directed further deposit of another ten percent within four weeks, without prejudice to the rights of the parties. The Court also directed de-freezing of the petitioner's bank accounts and remanded the matter to the Assessing Authority for a fresh decision on merits after complying with the principles of natural justice, affording adequate opportunity to all parties, and passing a speaking order within two months. No coercive steps were to be taken against the petitioner during this period. The Court explicitly stated that it had not expressed any opinion on merits and all issues were left open.

Key Issues

1. Whether the order dated 14.09.2021 and the consequent Form GST APL-2 dated 15.09.2021, passed by the Additional Commissioner of State Taxes (Appeal), rejecting the petitioner's appeal on the ground of non-submission of a certified copy of the impugned order, are legally sustainable, particularly in light of alleged violations of principles of natural justice and lack of sufficient reasoning in the original demand order? Petitioner's contention: The Petitioner argued that the appellate order was bad in law as it rejected the appeal on a procedural technicality without considering the merits, and that the original demand order was passed in violation of the principles of natural justice, with insufficient reasoning and without affording a fair opportunity of hearing. The Petitioner also stated that ten percent of the total demand had been deposited as a prerequisite for hearing the appeal. Revenue's contention: The learned counsel for the Revenue stated that they had no objection if the matter was remanded to the Assessing Authority for deciding the case afresh, that limitation would not be an impediment, and that the case would be decided on merits. They also agreed that no coercive steps would be taken against the petitioner during the pendency of the case.