Facts of the Case

The petitioner, Swastik Pesticides Ltd., a public limited company manufacturing pesticides and registered under the Chhattisgarh GST Act, had filed a declaration in Form TRAN-1 on 25.08.2017 claiming input tax credit of Central Excise duty on closing stock but mistakenly claimed it against State GST instead of Central GST. Following a summons under Section 70(1) of the CGST Act and a Form GST ASMT-10 dated 08.07.2020, a summary show cause notice in Form GST DRC-01 was issued on 07.09.2020 demanding Rs. 17.84 lakh (State GST of Rs. 10.32 lakh plus interest of Rs. 7.52 lakh). A summary order in Form GST DRC-07 and a substantive final order, both dated 23.01.2021, followed, along with a recovery notice in Form GST DRC-13 issued to banks. The petitioner sought reopening of the TRAN-1 portal, waiver of interest, and quashing of the DRC-07/DRC-13 proceedings, without separately impugning the final order dated 23.01.2021 itself, before the High Court of Chhattisgarh.

Issues Involved

  1. Whether the proceedings under Sections 73(1), 73(9) and 75(4) of the CGST Act were vitiated for non-compliance with the mandatory hearing requirement.
  2. Whether a challenge confined to the summary Form GST DRC-07/DRC-13, without impugning the underlying final order, could succeed.
  3. Whether the petitioner should be relegated to the statutory appellate remedy under Section 107.

Petitioner's Arguments

  • Reliance was placed on the Division Bench ruling in M/s Mahendra Sponge and Power Limited v. Assistant Commissioner State Tax, which set aside a DRC-07 order issued without the mandatory Section 75(4) hearing.
  • The same defect - a summary order issued without proper hearing and a reasoned final order - was said to vitiate the present proceedings as well.
  • The mistake in claiming ITC against the wrong tax head was bona fide and undiscovered until 2020.

Respondent's Arguments

  • A summary show cause notice was duly issued on 07.09.2020, and the petitioner participated throughout, signing order sheets on 08.07.2020 and again on 13.12.2021, by when the final order dated 23.01.2021 was already known to it.
  • The final order was never separately challenged despite this knowledge, and it is appealable under Section 107 of the CGST Act.
  • The petitioner had admitted its mistake in claiming ITC against the wrong head, and interest and penalty remained unpaid.

Court Order/Findings

  • The Court distinguished Mahendra Sponge, noting that in that case only a summary show cause notice existed with no final order, whereas here a full, reasoned final order dated 23.01.2021 had in fact been passed and never separately challenged.
  • Since the final order stood unchallenged despite the petitioner's admitted knowledge of it from the order sheet dated 13.12.2021, and since a statutory appellate remedy under Section 107 was available to raise every ground now urged, the Court declined to interfere.
  • The Court noted that the penalty and interest components remained unpaid and that the grounds urged in the writ petition could equally be raised before the Appellate Authority.
  • The petition was accordingly dismissed, leaving the petitioner to pursue its statutory appeal.

Important Clarification

A challenge confined to the summary Form GST DRC-07/DRC-13, without impugning an underlying reasoned final order that in fact exists, will not succeed merely by relying on precedent that invalidated a DRC-07 issued in the absence of any final order; that precedent does not extend to cases where a full order was in fact passed, and the assessee's remedy in such cases lies in a statutory appeal under Section 107.

Sections Involved

  • Section 73, CGST Act, 2017 - determination of tax not paid.
  • Section 75(4), CGST Act, 2017 - mandatory opportunity of hearing before an adverse order.
  • Section 107, CGST Act, 2017 - appeal to the Appellate Authority.

Decision – In Favour of

In favour of the Department. The writ petition was dismissed, with the Court holding that the unchallenged final order left the petitioner with only the statutory appellate remedy under Section 107.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: High Court of Chhattisgarh, Bilaspur
  • Case No.: WPT No. 174 of 2021
  • CNR: Not available
  • Coram: Justice Rakesh Mohan Pandey
  • Decision Date: 2 November 2023
  • Disposal Nature: Dismissed

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