M/S Sunrise Enterprises vs. The Union Of INDIA

Facts

The petitioner, M/s Sunrise Enterprises, filed a writ petition challenging an Order-in-Original dated March 17, 2022, passed by the Assistant Commissioner of Central Tax (third respondent). The petitioner contended that the impugned order was ex parte and based on the premise that the petitioner had not filed returns. The petitioner asserted that they had filed ST-3 returns, demonstrating no breach or default in offering GST on taxable supplies, and that the proceedings were initiated without verifying these returns. The petitioner also highlighted that notices and the final order were sent to their previous address, which they had vacated ten years prior, and they only became aware of the proceedings upon receiving a recovery notice on April 6, 2026. The petitioner relied on a previous High Court decision in a similar case.

Held

The Court allowed the petition in part. It quashed the Order-in-Original dated March 17, 2022, and the subsequent Recovery Notice dated April 6, 2026. The proceedings were remitted back to the Assistant Commissioner of Central Tax for reconsideration. The Court directed that the petitioner be given an opportunity to file copies of the returns produced along with the petition (Annexure-K). The petitioner was also directed to file their response along with the aforementioned annexures by October 30, 2026, without further notice. The Court was persuaded by the petitioner's submission that notices were sent to a previous address and that the demand should be made only after verifying the details in the filed returns.

Key Issues

1. Whether the impugned Order-in-Original dated March 17, 2022, passed by the Assistant Commissioner of Central Tax is liable to be quashed on the grounds that it was passed ex parte and without verifying the ST-3 returns filed by the petitioner, as contended by the petitioner? Petitioner's Arguments: The petitioner argued that the impugned order was passed ex parte, relying on the incorrect assumption that no returns were filed. They submitted ST-3 returns (Annexure-K) to prove compliance with GST obligations and contended that the proceedings were initiated without proper verification. The petitioner also argued that notices were sent to an old address, leading to their lack of awareness of the proceedings until a recovery notice was issued. They cited the High Court's decision in M/s. Karnataka Chinmaya Seva Trust Vs. Joint Commissioner of Central Tax to support their claim for intervention. Revenue's Arguments: The judgment records no specific arguments from the revenue or state respondents.