M/S Cosmos Health Care Services vs. The Assistant Commissioner Of Central Tax

Held

The Court allowed the petition in part and quashed the Order-in-Original dated 13.03.2023. The proceedings were restored to the respondent, providing the petitioner an opportunity to file a response to the Show Cause Notice dated 20.10.2021. The petitioner was directed to file this response, along with all documents relating to the Returns filed, by 30.11.2026. The respondent was then directed to consider the response and any additional documents filed by the petitioner and conclude the proceedings expeditiously. The Court's reasoning was based on its past practice of intervening in cases where proceedings initiated and concluded ex-parte based on information from the Central Board of Direct Taxes, to restore proceedings and allow the petitioner to file details of returns filed for consideration. The Court acknowledged the petitioner's contention that the business had closed down and its location shifted, which may have contributed to the non-participation.

Facts

The petitioner, M/s Cosmos Health Care Services, a partnership firm, filed a writ petition before the High Court of Karnataka challenging an Order-in-Original dated 13.03.2023, passed by the Assistant Commissioner of Central Tax, South Division-4. This order pertains to the financial year 2016-17 and was issued ex-parte based on information received from the Central Board of Direct Taxes. The petitioner's grievance stems from the threat of recovery under this adjudication order. The petitioner claims non-participation in the adjudication proceedings was due to bona fide reasons, including business slowdown, cessation of business, and relocation of business premises during the Covid-19 pandemic when the adjudication notice was issued in 2021. The petitioner asserts that they had filed ST-3 Returns and offered taxes for the relevant period, which were not considered.

Key Issues

1. Whether the Order-in-Original dated 13.03.2023, passed ex-parte by the Assistant Commissioner of Central Tax, South Division-4, for the financial year 2016-17, should be quashed and the proceedings restored to the respondent, considering the petitioner's reasons for non-participation and the contention that ST-3 Returns were filed and taxes offered. Petitioner's Arguments: The petitioner argued that the adjudication proceedings were initiated in 2021 during Covid-19 restrictions. They were not in possession of business premises due to a slowdown and had ceased operations. Despite filing ST-3 Returns and offering taxes for the relevant year, these were not considered. The petitioner contended that their non-participation was bona fide and that they have a good case on merits. Respondent's Arguments: The respondent, represented by the Assistant Commissioner of Central Tax, South Division-4, did not present specific arguments against the petitioner's claims in the provided text. The court noted that the respondent's counsel accepted notice and was heard in light of the reasons offered by the petitioner.