Om Shankar Metal (Through Its Proprietor Mr. Sidhant Sharma) vs. Assistant Commissioner Mohan Co Operative Industrial Estate Division Delhi East Delhi CBIC

Held

The Court held that the writ petition was not maintainable for adjudication of disputed questions of fact, particularly concerning the service of the notice of personal hearing. The Petitioner's denial of receipt and the Respondent's assertion of dispatch raised a factual dispute that required examination of underlying records, including registration particulars and email address amendments, which is best undertaken by the Appellate Authority. The Court noted that the Impugned Order did not adequately consider Sections 74(5) to 74(7) regarding penalty imposition, did not quantify interest payable on deposited tax, did not reconcile the 15% penalty deposit with the 100% penalty confirmation, and lacked specific findings of fraud, wilful misstatement, or suppression. The Court also noted that the other contentions, including those related to Rule 37, Form DRC-07, and the DIN, also required examination of documentary evidence. Therefore, the Court relegated the Petitioner to the alternative remedy of appeal under Section 107 of the Act. The Petitioner was granted liberty to file an application under Section 14 of the Limitation Act for exclusion of the period the writ petition was pending. The observations were confined to the maintainability and disposal of the writ petition, not expressing an opinion on the merits of the case.

Facts

The Petitioner, Om Shankar Metal, filed a writ petition challenging an ex-parte Order-in-Original dated 31.01.2025 and a consequential DRC-07 dated 02.02.2025, passed under Section 74 of the Central Goods and Services Tax Act, 2017. The proceedings stemmed from a departmental audit for the period 01.07.2017 to 31.03.2023, which alleged irregular availment of Input Tax Credit (ITC) and delayed payments. The Petitioner had deposited Rs.66,14,525/- towards tax, Rs.1,77,226/- towards interest, and Rs.9,92,179/- towards penalty through Forms DRC-03 prior to the issuance of a formal Show Cause Notice (SCN). The Petitioner contended that the impugned order was passed without granting a personal hearing, violating Section 75(4) of the Act. The Respondent claimed the SCN was uploaded on the GST portal and personal hearing notices were sent to the Petitioner's registered address and email.

Key Issues

1. Whether the ex-parte Order-in-Original dated 31.01.2025 and the consequential DRC-07 dated 02.02.2025, passed under Section 74 of the Central Goods and Services Tax Act, 2017, are liable to be set aside for violation of Section 75(4) of the Act due to the non-grant of a personal hearing to the Petitioner? - Petitioner's argument: The Petitioner argued that no personal hearing was granted, violating Section 75(4). They presented evidence of their registered email address (sidhant.nanu@gmail.com) being used by the GST Department, disputing the Respondent's claim of communication to advocatedeepaksingh@yahoo.in. - Respondent's argument: The Respondent contended that the SCN was uploaded on the GST portal and personal hearing notices were sent to the Petitioner's registered address and email, providing a dispatch register as proof. 2. Whether the invocation of Section 74 of the Act of 2017 is justified in the absence of specific findings of fraud, wilful misstatement, or suppression of facts? - Petitioner's argument: The Petitioner argued that Section 74 requires proof of fraud, wilful misstatement, or suppression, which was not established in the impugned order or counter affidavit. - Respondent's argument: Not recorded. 3. Whether the imposition of penalty equivalent to 100% of the tax is contrary to Sections 74(5) to 74(7) of the Act, given the Petitioner's prior deposit of tax, interest, and a portion of the penalty? - Petitioner's argument: The Petitioner contended that the 100% penalty is contrary to the Act, as they had already deposited the entire tax and a significant portion of penalty and interest before the SCN. - Respondent's argument: Not recorded. 4. Whether the DRC-07 travels beyond the Impugned Order and overstates the demand, and whether the DIN on the order is incorrect as per CBIC Circular No. 122/41/2019-GST? - Petitioner's argument: The Petitioner argued that the DRC-07 failed to credit prior deposits, overstating the demand, and that the Impugned Order bore a Customs DIN instead of a GST DIN, contrary to the circular. - Respondent's argument: Not recorded.