M/S Sai Residency PVT. LTD. Through Its Director, Sujeet Kumar Jha vs. The State Of Bihar

Held

The Court held that the cause of action for filing an appeal under Section 107 of the CGST/BGST Act, 2017, arose only after the rejection of the petitioner's rectification application on 23.02.2026. The Court found that the petitioner had filed the present writ application within the statutory period for filing an appeal before the learned Appellate Authority after the rejection of the rectification application. Therefore, the Court considered this an exceptional case for entertaining the writ application. The Court directed that the writ application be disposed of with liberty to the petitioner to file an appeal before the learned Appellate Authority under Section 107 of the CGST/BGST Act, 2017, within 10 weeks from the date of the order. The Appellate Authority was directed to consider the merit of the appeal without raising any issue with respect to limitation if the appeal was filed within the stipulated period. The Court did not decide on the merits of the demand order itself but provided a procedural path for the petitioner to seek redressal.

Facts

The petitioner, M/s Sai Residency Pvt. Ltd., filed a writ application challenging a demand order dated 31.12.2023, passed under Section 73(9) of the BGST Act, 2017, confirming a tax demand of approximately Rs. 3,56,52,568/-. The petitioner also sought to quash the show cause notice dated 15.09.2023, de-freeze its bank account, and refund illegally recovered amounts. The petitioner's GST registration was cancelled effective 12.02.2020. The show cause notice was based on a lease deed found on the "Bhumi Jankari" portal. The petitioner argued that the impugned order was passed mechanically without a personal hearing and that the lease deed was executed in a personal capacity, not as Managing Director. A rectification application filed on 29.05.2025 was rejected on 23.02.2026. The respondent department contended that the petitioner failed to reply to the show cause notices and had an alternative remedy of appeal under Section 107 of the CGST/BGST Act.

Key Issues

1. Whether the demand order dated 31.12.2023, passed under Section 73(9) of the BGST Act, 2017, is liable to be quashed for non-compliance with the mandatory requirement of personal hearing under Section 75(4) of the Act? 2. Whether the petitioner has an alternative remedy of appeal under Section 107 of the CGST/BGST Act, 2017, and if so, whether the writ petition is maintainable given the delay in filing? Petitioner's Arguments: The petitioner argued that the impugned order was passed mechanically without providing an opportunity for a personal hearing, which is a mandatory requirement under Section 75(4) of the Act. They also contended that the assessment was based on an erroneous ground, as the lease deed was executed in their individual personal capacity, not as the Managing Director of the company, a fact that would have been evident from the "Bhumi Jankari" portal. The petitioner also argued that their rectification application was rejected, and the present writ application was filed without delay after the rejection of the rectification application. Respondent's Arguments: The respondent department argued that the petitioner failed to comply with the show cause notices served on the common portal, compelling the authority to pass the impugned order. They further submitted that the petitioner has an alternative remedy of appeal under Section 107 of the CGST/BGST Act, 2017, and that the writ application was filed with a delay of more than two years, making it liable for rejection on this ground alone.