Facts of the Case

M.P. Commodities Pvt. Ltd. filed a writ application before the High Court of Gujarat at Ahmedabad challenging two Orders in Form GST DRC-07 dated 18.12.2021 and 27.12.2021 passed by the Assistant Commissioner of State Tax, Division-3, Gandhinagar, along with the two underlying Show Cause Notices dated 21.10.2019 in Form GST DRC-01. By an earlier order dated 23.02.2022, the Division Bench had prima facie found the assessment orders to be non-speaking, and had been inclined to quash them at the threshold, but issued short notice at the request of the learned AGP for the State. When the matter was taken up for final hearing on 09.03.2022, the learned AGP fairly conceded that although the record showed relevant aspects had been considered, this was not reflected in the impugned orders themselves.

Issues Involved

  1. Whether the assessment orders in Form GST DRC-07 dated 18.12.2021 and 27.12.2021 were liable to be quashed as non-speaking orders.
  2. Whether the matter warranted remand for a fresh, reasoned adjudication rather than the writ court examining the tax dispute on merits.

Petitioner's Arguments

  • The impugned assessment orders were non-speaking and did not deal with the petitioner's submissions or evidence.
  • The two underlying show-cause notices in Form GST DRC-01, both dated 21.10.2019, lacked clear and explicit reasons and grounds for the proposals raised.
  • Pending final disposal, the petitioner sought a stay on implementation and coercive recovery pursuant to the impugned orders.

Respondent's Arguments

  • The learned AGP initially sought that short notice be issued before the Court proceeded to quash the orders at the threshold.
  • On the returnable date, the AGP fairly conceded that the impugned orders, though the record showed relevant aspects were considered, did not reflect that consideration in the orders themselves.

Court Order / Findings

  • The Court held that the impugned assessment orders were non-speaking, a position fairly conceded by the State's counsel.
  • The orders in Form GST DRC-07 dated 18.12.2021 and 27.12.2021 were quashed and set aside, and the matter was remitted to the Assistant Commissioner of State Tax, Division-3, Gandhinagar, for fresh hearing.
  • The Assistant Commissioner was directed to hear the writ applicants afresh and ensure that a reasoned order is passed dealing with each and every submission raised, permitting both oral and written submissions, and allowing the applicants to even question the legality and validity of the show-cause notices themselves.
  • The entire exercise was directed to be completed within three months; the writ application was disposed of and the interim relief vacated.

Important Clarification

  • Assessment orders that fail to record reasons dealing with the assessee's submissions — even where the underlying record shows the aspects were internally considered — are liable to be treated as non-speaking and quashed; on remand, the assessing authority must pass a fresh reasoned order addressing every submission, including, where relevant, challenges to the legality of the show-cause notice itself, within a time-bound period.

Sections Involved

  • Form GST DRC-01 under the CGST Rules, 2017 — summary of the show-cause notice.
  • Form GST DRC-07 under the CGST Rules, 2017 — summary of the order creating a demand.

Decision – In Favour of

In favour of the Assessee — the non-speaking assessment orders were quashed and the matter remitted for a fresh, time-bound, reasoned adjudication.

Related Case Laws

  • Other Gujarat High Court rulings quashing non-speaking GST assessment orders and directing time-bound reasoned re-adjudication.

Case Details

  • Court: High Court of Gujarat at Ahmedabad
  • Case No.: R/Special Civil Application No. 3796 of 2022
  • Coram: Hon'ble Mr. Justice J.B. Pardiwala and Hon'ble Ms. Justice Nisha M. Thakore
  • Date of Order: 09.03.2022

Link to Download the Order

You can view/download the order here.

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.