Shankar Prasad Gupta vs. State Of West Bengal And Ors.

Facts

The petitioner, Shankar Prasad Gupta, engaged in textile printing and trading as "G. S. Fabrics", is registered under the CGST and WBGST Acts. The issue concerns an ex parte assessment order dated 10.08.2023, passed under Section 73 of the CGST/WBGST Act by respondent no. 4. A show-cause notice dated 13.06.2023 was issued for the period July 2017 to March 2018, raising a demand of Rs. 8,11,565/- due to alleged Input Tax Credit (ITC) mismatch. The petitioner claims the show-cause notice was not served, leading to their inability to file a reply and consequently an ex parte order. The demand is also alleged to be contrary to Circular No. 183/15/2022-GST.

Held

The Court held that the petitioner had made out a prima facie case warranting interference. It found that the impugned orders were passed without adhering to the procedure prescribed in paragraph 4 of Circular No. 183/15/2022-GST dated 27th December, 2022. The Court noted that the mandate of the circular requires the proper officer to first seek details and verify the fulfillment of conditions under Section 16 of the CGST Act before confirming any demand on account of ITC mismatch, and this exercise did not appear to have been undertaken. The Court also took judicial note of the screenshot of the show-cause notice and the consequential ex parte order. Consequently, the adjudication order dated 10.08.2023 and the Recovery Notice dated 27.02.2026 were quashed and set aside. The petitioner was directed to file a comprehensive representation before respondent no. 4 within four weeks, which the respondent was to consider and dispose of in light of the aforementioned circular, after affording a reasonable opportunity of hearing. The adjudicating authority was at liberty to take an independent decision on merits without being influenced by any observations in the order. The writ petition was disposed of without going into the merits of the case.

Key Issues

1. Whether the ex parte assessment order dated 10.08.2023, passed under Section 73 of the CGST/WBGST Act, is sustainable in law, particularly in light of Circular No. 183/15/2022-GST dated 27th December, 2022, concerning the reconciliation of ITC between FORM GSTR-3B and FORM GSTR-2A? Petitioner's arguments: The petitioner contended that the assessment order is illegal and violates principles of natural justice. They argued that the procedure mandated by paragraph 4 of Circular No. 183/15/2022-GST, requiring the proper officer to first seek details and verify conditions under Section 16 of the CGST Act before raising an ITC mismatch demand, was not followed. Furthermore, the petitioner claimed the show-cause notice was not served, preventing them from filing a reply, and relied on the Division Bench judgment in Goutam Bhowmik vs. State of West Bengal & Ors. for the necessity of personal hearing. Revenue's arguments: The State authorities opposed the petitioner's submissions, asserting no illegality was committed. They argued that as per Section 169(1)(d) of the CGST/WBGST Act, 2017, uploading notices or orders on the common portal constitutes valid service, and the show-cause notice was duly uploaded. Since the petitioner did not file a reply, the adjudicating authority was justified in passing an ex parte order. The State also submitted that an opportunity for personal hearing was afforded but not availed by the petitioner.