Facts of the Case

The petitioner challenged the assessment order dated 30.12.2020 passed under Section 73 of the GST Act along with the summary order in FORM GST DRC-07, whereby GST, interest and penalty amounting to approximately ₹33.70 lakh were imposed for the period April 2019 to March 2020.

The petitioner also challenged the appellate order dated 18.08.2021, by which the Additional Commissioner (Appeals) rejected the appeal as time-barred while marginally reducing the interest component and confirming the remaining tax demand.

Apart from challenging the assessment proceedings, the petitioner sought refund of excess IGST, refund of statutory pre-deposit, permission to amend GSTR-3B returns and protection from coercive recovery proceedings.

 

Issues Involved

  1. Whether an assessment order passed under Section 73 of the GST Act without providing adequate opportunity of hearing violates the principles of natural justice.
  2. Whether an ex parte assessment order lacking proper reasoning can be sustained in law.
  3. Whether the High Court can exercise writ jurisdiction despite the existence of an alternate statutory remedy.
  4. Whether the appellate authority was justified in rejecting the appeal solely on the ground of limitation.
  5. Whether the assessment proceedings deserved to be remanded for fresh adjudication.

 

Petitioner's Arguments

  • The assessment proceedings were completed without granting sufficient opportunity of hearing.
  • The assessment order was passed ex parte and without assigning proper reasons for determining the tax liability.
  • The authorities failed to appreciate the factual position regarding excess payment of IGST and the petitioner was entitled to consequential refund.
  • The appellate authority mechanically rejected the appeal on limitation without examining the merits of the case.
  • The petitioner also sought permission for correction of GSTR-3B returns and refund of excess tax and pre-deposit amount wherever admissible.

 

Respondent's Arguments

The Revenue fairly submitted before the High Court that:

  • It had no objection if the matter was remanded to the Assessing Authority for fresh adjudication.
  • The limitation issue should not obstruct reconsideration of the case.
  • The matter may be decided afresh on merits.
  • No coercive action would be taken during the pendency of fresh proceedings.

The Court accepted this statement.

 

Court Order / Findings

The Patna High Court held that it was justified in exercising its writ jurisdiction despite the availability of statutory remedies because the assessment suffered from serious procedural defects.

The Court observed that:

  • The petitioner was not granted adequate opportunity of hearing.
  • The assessment order was passed ex parte.
  • The order did not disclose sufficient reasons for determining the tax demand.
  • The authorities failed to adjudicate all factual and legal issues.

Accordingly, the High Court:

  • Quashed the assessment order dated 30.12.2020 passed under Section 73.
  • Quashed the appellate order dated 18.08.2021.
  • Quashed the summary demand issued in FORM GST DRC-07.
  • Directed the petitioner to comply with the additional pre-deposit requirement as undertaken before the Court.
  • Directed immediate de-freezing/de-attachment of bank accounts, if attached.
  • Directed the Assessing Authority to conduct fresh proceedings after granting full opportunity of hearing.
  • Directed the Assessing Authority to pass a reasoned speaking order.
  • Directed that no coercive action shall be taken during fresh proceedings.
  • Clarified that all issues on merits remain open for adjudication.
  • Reserved liberty to the petitioner to challenge the fresh order in accordance with law.

 

Important Clarification

This judgment reiterates that:

  • An assessment order passed under Section 73 of the GST Act without adequate opportunity of hearing is liable to be set aside.
  • Ex parte assessment orders must contain proper reasoning and application of mind.
  • Violation of principles of natural justice permits the High Court to exercise writ jurisdiction notwithstanding availability of statutory remedies.
  • Fresh adjudication must be conducted after granting reasonable opportunity to the taxpayer.
  • Speaking orders are mandatory in GST adjudication proceedings.

Sections Involved

  • Section 73 of the Central Goods and Services Tax Act, 2017
  • Section 107 of the Central Goods and Services Tax Act, 2017 (Appeal)
  • Section 107(6) – Pre-deposit for Appeal
  • Section 107(11) – Powers of Appellate Authority
  • Rule 142(5) of the CGST Rules, 2017
  • FORM GST DRC-07


Link to Download the Order https://www.mytaxexpert.co.in/uploads/1782895352_72.pdf

 

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