Subramani Jegan vs. The Deputy State Tax Officer-1

Facts

The petitioner, proprietor of M/s. J K Agencies, filed a writ petition challenging an order dated 21.03.2023 passed by the Deputy State Tax Officer-1, Virudhunagar. The petitioner operated an Aavin Milk Booth-cum-Tea Shop from 22.06.2018 and was directed to relocate it on 13.12.2018, after which the booth was closed. The petitioner contended that for the period 2018-2019, tax liability should only be from 22.06.2018 to 13.12.2018. The petitioner also argued that certain Aavin products are exempted from GST, but the respondent had levied tax on the entire profit and loss. Furthermore, the petitioner claimed the show cause notice dated 09.02.2023 was not properly served, and the impugned order was passed on 21.03.2023, just one week after the scheduled personal hearing on 13.03.2023, violating principles of natural justice.

Held

The Court held that the impugned order dated 21.03.2023 was liable to be quashed for violating the principles of natural justice. The Court noted that the show cause notice was issued on 09.02.2023, the personal hearing was scheduled for 13.03.2023, and the order was passed on 21.03.2023, a mere week later. Crucially, the Court observed that the order was passed without properly serving the show cause notice to the petitioner. Additionally, the Court acknowledged the petitioner's contention that the respondent had erred in levying GST on exempted products and by considering the entire profit and loss. Consequently, the Court quashed the impugned order and remitted the matter back to the concerned authorities. The petitioner was directed to submit objections within three weeks of receiving the order, and the respondent was directed to afford a personal hearing before passing a fresh order within four weeks thereafter. The writ petition was allowed with no order as to costs.

Key Issues

1. Whether the impugned order dated 21.03.2023, passed by the Deputy State Tax Officer-1, Virudhunagar, is liable to be quashed for being arbitrary, illegal, and without jurisdiction, particularly concerning the levy of GST on exempted products and the alleged violation of the principles of natural justice? (Question of law and mixed fact and law, concerning principles of natural justice and taxability of goods under GST law). Petitioner's Arguments: - The tax liability for the period 2018-2019 should only be from 22.06.2018 to 13.12.2018, as the business operated only during this period. - Certain Aavin products are exempted from GST, and the respondent erred by including them in the tax calculation, taking the entire profit and loss. - The principles of natural justice were violated as the show cause notice was allegedly not served, and the order was passed hastily after the personal hearing. Respondent's Arguments: - The judgment records no specific arguments from the respondent's side.