Chakra Club vs. The State Tax Officer - 1

Held

The Court decided not to delve into the merits of taxability of the petitioner's supplies, stating that the matter might require further consideration. However, to balance the interests of both the petitioner and the department, the Court set aside the impugned assessment orders. The cases were remitted back to the respondent for passing fresh orders. This was made conditional upon the petitioner depositing 10% of the disputed tax amount into the respondent's Electronic Cash Register within 30 days of receiving the order. The impugned orders were to be treated as an addendum to the show cause notices. The petitioner was directed to file a reply within 30 days, and the respondent was to pass fresh orders on merits and in accordance with law, preferably within two months, after hearing the petitioner. The ratio decidendi is that while strict adherence to procedural timelines can be a ground for dismissal, courts may grant relief by remitting matters for fresh consideration, subject to a partial deposit of the disputed tax, to ensure a fair hearing on merits.

Facts

The petitioner, Chakra Club, filed four writ petitions challenging assessment orders passed by the respondent, the State Tax Officer-1, Intelligence, for the assessment years 2018-19, 2019-20, 2020-21, and 2021-22. The total disputed tax amounts were Rs. 28,012/-, Rs. 69,466/-, Rs. 31,686/-, and Rs. 28,728/- respectively. The petitioner's club was inspected by the Intelligence Wing on November 16, 2022, and an intimation was sent on December 29, 2022. The petitioner submitted a reply on January 24, 2023. Subsequently, show cause notices were issued, to which the petitioner failed to reply, assuming the demands would be dropped. The assessment orders were passed on December 22, 2023.

Key Issues

1. Whether the writ petitions are maintainable on grounds of being time-barred and suffering from laches, as argued by the respondent, relying on the Supreme Court decisions in Assistant Commissioner (CT) LTU, Kakinada and others vs. Glaxo Smith Kline Consumer Health Care Limited and Singh Enterprises Vs. Commissioner of Central Excise, Jamshedpur and others? 2. Whether the assessment orders are liable to be quashed on merits, as contended by the petitioner, citing decisions from the Calcutta High Court (Culcutta Club vs. Deputy Commissioner) and the Supreme Court, regarding the taxability of supplies under the GST regime? The petitioner argued that the law on the taxability of their supplies is settled by various High Court and Supreme Court decisions, warranting the quashing of the demands. The respondent contended that the writ petitions should be dismissed due to significant delay and laches, and that the appellate remedy under Section 107 of the GST Enactments is also time-barred.