M/S Shivam Trading vs. The State Of Bihar

Held

The High Court dismissed the writ application, holding that it was not maintainable due to an inordinate and unexplained delay of approximately 18 months in filing the petition after the impugned order dated 06.11.2023. The Court referred to its own judgment in M.K. Traders v. State of Bihar & Ors., which held that entertaining a writ application filed after such a significant delay would frustrate the legislative intent and render the statutory scheme otiose. While acknowledging that an alternative remedy is not an absolute bar to writ jurisdiction in exceptional circumstances (breach of fundamental rights, violation of natural justice, excess of jurisdiction, challenge to vires), the Court found that the present case did not fall into such exceptional categories. The Court noted that the petitioner was served with the show cause notice and the impugned order via the GST portal, email, and SMS, but failed to respond or file a statutory appeal within the prescribed period. The Court also distinguished the judgments relied upon by the petitioner, finding them inapplicable to the facts of the case. Specifically, Armour Security (India) Ltd. dealt with cross-empowerment, Abbott Healthcare with a factually incorrect show cause notice, and Nkas Services with insufficiency of foundational allegations for a Section 74 notice, none of which applied here. The Court concluded that proper opportunity of hearing was afforded, and the petitioner's indolent approach disentitled them to relief.

Facts

The petitioner, M/s Shivam Trading, filed its GST returns for the financial year 2017-18 as NIL tax liability, asserting it dealt only in exempted edible grains. The Assistant Commissioner, Commercial Taxes, Bihar Sharif Circle (respondent no. 6), issued a demand notice dated 06.11.2023 for ₹65,55,462/- towards tax, interest, and penalty, alleging discrepancies indicating the petitioner dealt in taxable goods like wheat and cereal grains. The petitioner claims no proper notice was served. The respondent department contends that a show cause notice in Form GST DRC-01 was issued on 04.09.2023 and the summary of the order in Form GST DRC-07 on 06.11.2023, both uploaded on the GST portal and intimated via email and SMS. The petitioner failed to respond or appear, leading to an ex-parte order. The department also asserts the demand is within statutory limitations and recovery proceedings under Section 79 were initiated.

Key Issues

1. Whether the demand notice dated 06.11.2023, issued under Section 73(9) of the CGST/BGST Act, 2017, is liable to be quashed for non-compliance with principles of natural justice and statutory provisions, as argued by the petitioner? 2. Whether the writ application, filed after an inordinate delay of approximately 18 months from the impugned order, is maintainable under Article 226 of the Constitution of India, as contended by the respondent department? Petitioner's arguments: The petitioner argued that the demand notice was issued without proper service of notice or any communication, making it unsustainable. They relied on judgments from the Punjab & Haryana High Court (Abbott Healthcare Private Limited), Jharkhand High Court (Nkas Services Private Limited), and the Supreme Court (Armour Security (India) Ltd.) to support their claims that the show cause notice was factually incorrect, lacked mandatory ingredients, and the order was without jurisdiction. Respondent's arguments: The respondent department argued that notices were duly served via the GST portal, email, and SMS. They contended that the petitioner failed to furnish adequate documentation or appear for hearings, justifying the ex-parte assessment order under Section 73(8). The department asserted that the order was within statutory limitation periods and that the writ application was filed with unexplained delay, rendering it non-maintainable, citing a previous judgment of the same High Court in M.K. Traders v. State of Bihar & Ors.