Facts of the Case

  • The Petitioner, M/s Motiprabha Infratech Pvt. Ltd., is a private limited company engaged in business operations with its authorized office based in Patna, Bihar.
  • The Assistant Commissioner of State Taxes, Patliputra Circle, Patna (Respondent No. 7), initiated tax proceedings against the petitioner for the Financial Year 2020-21 (specifically covering the period from February 2020 to September 2020).
  • A show-cause notice in Form GST DRC-01 was issued to the petitioner on February 15, 2021, directing them to submit a reply by February 21, 2021—allocating a response window of a mere 6 to 9 days.
  • Without waiting for the standard statutory period to conclude, the Assessing Officer rushed to pass an ex-parte assessment order dated February 24, 2021, creating a total tax, interest, and penalty liability of Rs. 9,85,119/- (comprising IGST, CGST, and SGST components).
  • Concurrently, a summary of the order/demand notice in Form GST DRC-07 was generated on the very same day.
  • The petitioner initially preferred a statutory appeal before the Additional Commissioner of State Taxes (Appeals), which was summarily rejected on September 28, 2022, purely on technical grounds due to a limitation delay of 17 days. Aggrieved by this, the petitioner approached the High Court via a writ petition.

Issues Involved

  • Whether the actions of the Revenue Department in passing an ex-parte assessment order within 9 days of issuing a show-cause notice violate the mandatory 30-day statutory period provided under Section 73/74 of the CGST/BGST Act?
  • Whether an assessment order and subsequent summary demand (Form DRC-07) passed in clear breach of statutory timeframes can survive judicial scrutiny under Article 226 of the Constitution of India?
  • Whether the appellate order rejecting the taxpayer's appeal purely on a minor delay of 17 days was justified when the underlying assessment itself lacked legal jurisdiction?

Petitioner’s Arguments

  • The petitioner argued that the impugned assessment order and DRC-07 demand notice were completely bad in law, as they were passed in blatant violation of Section 73(8) / 74 of the GST Act, which mandates a minimum of 30 days for a response.
  • It was emphasized that the notice was issued on February 15, 2021, and the final order was slapped on February 24, 2021 (just 9 days later), denying them a fair opportunity to defend themselves.
  • The petitioner contended that the Assessing Officer aggressively inflated their tax liability by up to six times based purely on GSTR-7 (TDS certificates issued by customers) without matching or verifying actual invoices, GSTR-3B, GSTR-2A, and GSTR-9 data uploaded on the portal.
  • The petitioner requested a quashing of the orders, a stay on coercive recovery actions, and a directional mandate to refund the 10% pre-deposit amount ($Rs. 93,365/-$) paid under Section 107(6)(b) to allow a fresh, fair trial.

Respondent’s Arguments

  • The Revenue authorities, represented by the learned counsel and Assistant Solicitor General (ASG), defended the standard recovery and assessment procedures initiated by the Patliputra Circle.
  • It was subtlely contended that since the taxpayer did not upload a timely compliance response by the designated interim date specified in the notice (February 21, 2021), the Assessing Officer acted within their administrative rights to finalize an ex-parte order to protect interest revenue.
  • They further stood by the Appellate Authority’s decision, arguing that statutory timelines for filing appeals are rigid, and a delay beyond the condonable period leaves the authority with no choice but to reject the appeal.

Court Order / Findings

  • The Hon’ble Bench consisting of the Chief Justice and Mr. Justice Partha Sarthy observed that it is an undisputed fact that the minimum statutory period of 30 days mandated under the provisions of the CGST/BGST Act, 2017 was not afforded to the petitioner.
  • The High Court strongly noted that the notice dated 15.02.2021 required a reply by 21.02.2021, and the officer rushed to pass the final ex-parte order on 24.02.2021. The Court declared: "It is the mandate of law that 30 days' period has to be afforded to the parties, which was not done in the instant case."
  • On this ground of absolute procedural illegality alone, the High Court quashed the notice dated 15.02.2021, the final assessment order dated 24.02.2021, and the corresponding appellate orders.
  • The writ petition was allowed, and the Court directed the assessing officer to issue a fresh notice strictly complying with statutory timeframes and to pass a fresh order only after giving a lawful opportunity of being heard.

Important Clarification

This ruling clarifies an essential pillar of tax jurisprudence: Statutory timelines are not directory; they are mandatory. Even if a tax authority provides an interim date for file submission, they cannot abridge or truncate the overarching 30-day window allowed by law to a taxpayer. Any final order or demand raised before the completion of these 30 days constitutes an institutional breach of natural justice, rendering the entire assessment void ab initio.

Section Involved

  • Section 73 & Section 74 of the Central Goods and Services Tax (CGST) Act, 2017 / Bihar Goods and Services Tax (BGST) Act, 2017: Deals with the determination of tax not paid, short paid, erroneously refunded, or input tax credit wrongly availed or utilized.
  • Section 73(8) / 74(A): Governs the mandatory statutory timeframe (minimum 30 days) required to be afforded to a taxpayer to make payment or submit a reply before an adverse order is finalized.
  • Section 107(6)(b): Deals with the mandatory 10% pre-deposit requirement for preferring an appeal before the Appellate Authority.

Link to download the order - https://mytaxexpert.co.in/uploads/1782980401_290compressed.pdf

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