M/S. Arun Enterprises vs. The Assistant Commissioner Of GST And Central Excise

Held

The Court held that the impugned order, passed under the best judgment method, should be quashed and the case remitted back to the first respondent. The primary reason for this decision was that the show cause notice was issued after the implementation of GST on 01.07.2017, pertaining to a demand under the Finance Act, 1994. The Court noted that the Commissioner (Appeals) does not have the power to remand cases back to the Original Authority. Therefore, to obviate inconvenience, the High Court decided to quash the order and remand the matter. This decision was made subject to the petitioner depositing 25% of the disputed tax within four weeks. The quashed order was to be treated as a corrigendum to the show cause notice, and the petitioner was directed to file a reply within 30 days. If the petitioner failed to comply, the first respondent was at liberty to re-confirm the demand based on available materials. The Court explicitly stated that the writ petition was allowed on these conditions.

Facts

The petitioner, M/s. Arun Enterprises, filed a writ petition challenging an Order in Original No. 56/2022-ST dated 25.11.2022, passed by the Assistant Commissioner of GST & Central Excise (first respondent). The impugned order was passed ex-parte under the best judgment assessment method because the petitioner allegedly failed to participate in the proceedings and reply to the show cause notice. The petitioner contended that the demand was unsustainable. The respondents argued that the petitioner failed to appear despite notice and personal hearing, and the writ petition was liable to be dismissed for latches, citing a Supreme Court judgment. The show cause notice was issued on 21.10.2021 for a demand under the Finance Act, 1994, after the implementation of GST.

Key Issues

1. Whether the impugned order passed under the best judgment assessment method is sustainable, considering the petitioner's alleged non-participation in the proceedings, and if the Court should interfere under Article 226 of the Constitution of India? The petitioner argued that the demand raised by the first respondent is unsustainable. The petitioner's primary contention is that the impugned order should be quashed. The respondents argued that the petitioner failed to reply to the show cause notice and did not participate in the personal hearing, necessitating the best judgment assessment. They further contended that the writ petition should be dismissed due to latches and cited the Supreme Court's decision in Assistant Commissioner (CT) LTU, Kakinada and others Vs. Glaxo Smith Kline Consumer Health Care Limited.