M/S Satyendra Nath Biswas vs. State Of Chhattisgarh

Facts

The petitioner, M/s. Satyendra Nath Biswas, a proprietorship firm registered under GST, provides construction services. The firm received a notice under Section 61 of the CGST Act, 2017, for scrutiny of returns for FY 2018-19. Due to lack of awareness and technical knowledge, the petitioner did not respond. Subsequently, a notice under Section 73 of the Act was issued, proposing tax liability at 28% due to alleged incorrect classification of supplies as NIL/exempted. An ex parte order was passed on April 16, 2024, directing payment of tax, interest, and penalties. The petitioner filed a writ petition challenging this order and seeking reconsideration after an opportunity of hearing, arguing for a concessional tax rate of 12%.

Held

The Court held that while the mere availability of an alternative remedy does not oust the High Court's jurisdiction under Article 226, especially in purely legal matters, the averments in the petition itself indicated that the petitioner received two notices and the reason for not responding – 'lack of awareness and technical knowledge' – was not considered sufficient. Therefore, it could not be said that there was a lack of substantial compliance with natural justice. The Court also noted the existence of an efficacious alternative remedy of filing an appeal under Section 107 of the CGST Act, 2017. Consequently, the Court found that the petitioner had not made out a case for interference under Article 226 of the Constitution. The petition was dismissed at the motion stage.

Key Issues

1. Whether the impugned order dated 16.04.2024 passed by the State Tax Officer is liable to be quashed for violation of the principles of natural justice, specifically concerning the opportunity of hearing as mandated by Section 75(4) of the CGST Act, 2017? 2. Whether the services provided by the petitioner are taxable at the concessional rate of 12% under Notification No. 11/2017-Central Tax (Rate) as contended by the petitioner, or at the proposed rate of 28% as alleged by the revenue? Petitioner's Arguments: The petitioner argued that the impugned order is arbitrary and contrary to law, as the services provided are taxable at 12% and not 28%. They emphasized that Section 75(4) of the Act mandates an opportunity of hearing, and the order was passed in violation of natural justice. They relied on Notification No. 11/2017-Central Tax (Rate) for the concessional rate. Revenue's Arguments: The State counsel argued that the petitioner's claim of lack of technical knowledge is not acceptable, and there was substantial compliance with natural justice. They contended that the petitioner failed to respond to notices and did not make any written request for adjournment under Section 75(5). The revenue also pointed out the existence of an efficacious alternative remedy under Section 107 of the Act.