M/S Shiv Shakti Steels PVT. LTD. vs. State Of Chhattisgarh

Facts

The petitioner, M/s Shiv Shakti Steels Pvt. Ltd., filed a writ petition challenging an order dated December 22, 2023, passed by the Additional Commissioner (Appeal) State Tax, Chhattisgarh, and a consequent demand summary issued on March 5, 2024. The dispute arose from a joint inspection by the State Mining and GST Departments on July 6, 2022, which led to the sealing of the petitioner's premises. Discrepancies in coal stock were noted, leading to a show cause notice. The petitioner provided explanations, and the seized goods were released on July 8, 2022, without tax, interest, or penalty. Subsequently, an intimation of tax payable on excess coal was issued, which the petitioner contested. A show cause notice under Section 74 of the CGST Act was issued on December 29, 2022, and an adjudication order imposing tax, penalty, and interest was passed on January 30, 2023. The first appeal was dismissed by the Additional Commissioner (Appeal).

Held

The Court held that while the petitioner had an alternative remedy of appeal under Section 112 of the CGST Act, 2017, the non-functioning of the GST Appellate Tribunal in Chhattisgarh presented a unique situation. The Court noted that the petitioner had already availed the remedy of the first appeal and raised the ground of non-provision of personal hearing. Therefore, the petitioner could not bypass the statutory remedy of the second appeal. Citing Supreme Court and other High Court judgments, the Court directed the petitioner to file an appeal before the appellate Tribunal within 30 days of receiving the order, upon depositing 20 percent of the demanded tax amount. The appeal is to be decided on merits once the Tribunal is functional. The statutory stay under Section 112(9) of the Act would remain in operation until the appeal is decided. Failure to deposit the pre-deposit amount would allow the State to proceed with recovery.

Key Issues

1. Whether the writ petition is maintainable despite the existence of an alternative statutory remedy of appeal under Section 112 of the CGST Act, 2017, given that the GST Appellate Tribunal is not functioning in Chhattisgarh? (Petitioner's contention: Yes, due to violation of principles of natural justice and non-functioning of the appellate tribunal. Revenue's contention: No, as the petitioner availed the first appeal and should pursue the second appeal once functional). 2. Whether the petitioner was afforded an adequate opportunity of personal hearing as mandated by Section 75(4) of the CGST Act, 2017, before the adjudication order was passed? (Petitioner's contention: No, the opportunity was not provided. Revenue's contention: Yes, the show cause notice mentioned the possibility of personal hearing, and the petitioner opted for 'No Personal Hearing' when submitting their reply). 3. Whether the adjudication order dated January 30, 2023, passed by the Deputy Commissioner of State Tax, is vitiated by a violation of principles of natural justice?