(2024) taxcode.in 37 HC
IN THE HIGH COURT OF GUJARAT
Aashutosh Realities
v.
Assistant Commissioner Ghatak 93 (Rajkot) Range 23 Division 10 and Ors.
R/Special Civil Application No. 22767 Of 2022
Decided on 27-Sep-24
Mr. Justice Bhargav D. Karia and Mrs. Justice Mauna M. Bhatt
Add. Info:
For Appellant(s): Mr Darshan B Gandhi, Mr SP Majmudar
Brief about the decision:
Judgment/Order:
ORAL ORDER
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. Heard learned advocate Mr. Darshan Gandhi for the petitioner and learned Assistant Government Pleader Mr. Chintan Dave for the respondent.
2. By this petition under Article 227 of the Constitution of India, the petitioner has prayed for quashing and setting aside the order passed under section 73(9) of the Central Goods and Service Tax Act,2017 [for short ‘the CGST Act’] in Form GST DRC-07 dated 04.04.2022 by respondent No.1 as well as the order dated 14.09.2022 passed by respondent No.2 in Order-in Appeal dismissing the appeal of the petitioner on the ground of limitation.
3. Brief facts of the case are that the petitioner-Firm is engaged in the business of Real Development Estate since Construction 01.10.2017 and and registered under the provisions of the CGST Act.
4. For the Financial Year 2019-20, the petitioner received notice in Form GST AMST-10 under section 61 read with Rule 99(1) of the GST Rules on 12.07.2021 for initiating the discrepancies in the return filed on the online portal of the petitioner. It was intimated that there was high utilization of the input tax credit and the petitioner-Firm was discharging its GST liabilities by making payment through ITC.
5. It appears that the petitioner thereafter replied to the said notice on 30.09.2021 in GST ASMT-11. On receipt of the reply of the petitioner-Firm, the respondent-Assessing Officer through online portal informed the petitioner that as per the record available with them, there is a difference in form claim of Input Tax Credit in FORM GSTR-3B and Form GSTR-2A of Rs. 46,46,081/-.
6. The petitioner thereafter served with the show-cause notice on 22.02.2022 in FORM GST DRC-01 with a demand of Rs. 66,43,896/-. It is the case of the petitioner that no reply could be filed to the aforesaid notice as the managing partner of the petitioner-Firm had undergone the surgery of local excision of right RMT/upper alveolectomy on 17.03.2022 and as the Email ID of the said partner was only available on the GST Portal, all communications were received by him and therefore, the petitioner-Firm could not file reply.
7. The respondent No.1 thereafter filed the impugned order dated 04.04.2022 determining the liability of Rs. 67,83,280/-.
8. Being aggrieved, the petitioner preferred appeal before the appellate-authority in the month of August 2022 after managing partner of the petitioner-Firm recovered from the cancer illness. The appellate authority however, rejected the appeal vide order dated 14.09.2022 on the ground of limitation.
9. Learned advocate Mr. Darshan Gandhi for the petitioner submitted that the petitioner could not avail opportunity of hearing due to illness of the managing partner. He invited attention of the Court to the medical papers placed on record from page No. 92 onwards, Annexure-E collectively to point out that the managing partner of the petitioner-Firm was undergoing the cancer treatment from March 2022 to August 2022. It was also pointed out that the consultant of the petitioner could file return in Form GSTR 2A and GSTR-1 only for the year 2021-22 in the months of March, April and May, 2022. However, the petitioner could not file any reply to the show-cause notice issued under section 73(1) of the CGST Act and therefore, impugned order is in violation of the principle of natural justice and liable to be quashed and set aside.
10. On the other hand, learned AGP Mr. Chintan Dave for the respondent submitted that the petitioner was aware about the show-cause notice dated 22.02.2022 which is evident from the record available on the GST Portal as the petitioner-Firm filed return in Form GSTR-1 and GSTR-3B for the Financial Year 2022-23 on 11.03.2022 followed by returns for the months of February and March on 29.04.2022 and 13.05.2022 respectively. It was submitted that as the petitioner-Firm was able to file the return on portal it cannot be presumed or said by no stretch of imagination that petitioner-Firm was not aware about the show-cause notice dated 22.02.2022 and as the petitioner-Firm failed to reply to the show-cause notice, the respondent No.1 was justified in passing the impugned order dated 04.04.2022 determining liability under the provisions of the CGST Act. It was submitted that the petitioner-Firm ought to have replied to the notice dated 22.02.2022 seeking time on the ground of illness of the managing partner of the petitioner-Firm. It was further submitted that the petitioner is a partnership-Firm and therefore, it is not a case of proprietorship firm where the proprietor is supposed to handle affairs of the business. It was submitted that in the facts of the case as the appellate authority has dismissed the appeal on the ground of limitation and in absence of any violation of the principle of natural justice, no indulgence is required to be shown to the petitioner for providing an opportunity of hearing as the petitioner has failed to comply with the notice issued in FORM DRC-01 dated 22.02.2022
11. Having heard the learned advocates for the respective parties and considering the facts of the case, it is not in dispute that 2024:GUJHC:53966-DB the managing partner of the petitioner-Firm whose Email ID was the only source of communication between the petitioner-Firm and the respondent-Department was critically ill and was suffering from cancer from the month of 2022 to August 2022. Learned AGP Mr. Dave has not been able to controvert these facts. However, the fact remains that the petitioner-Firm uploaded the return in FORM GSTR 01 and GSTR 3B in the months of March, April and May, 2022 and therefore, the consultant of the petitioner-Firm ought to have been drawn attention of the petitioner 22.02.2022. about the However, notice taking dated into consideration the fact that the managing partner of the petitioner-Firm was not well, the respondent-Department ought to have granted an opportunity of hearing before passing the impugned order dated 04.04.2022 once more so as to comply with the provisions of section 75(4) of the CGST Act which reads as under:
“Section 75. General Provisions relating to determination of tax.
(4) An opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision against such person.” is contemplated
12. On perusal of the above provision it is clear that the respondent-authority is required to give an opportunity of hearing if any adverse order is passed. The fact remains that the notice in Form DRC 01 is issued by the respondent No.1 before passing order and failure on the part of the petitioner-Firm to reply to such notice would be the sufficient ground for compliance of section 75(4) of the Act. However, in the facts of the case, when Managing Director of the petitioner-Firm was not well and the petitioner has pleaded the inability to reply to the notice, in our opinion, one fair chance is required to be given to the petitioner to comply with the principle of natural justice.
13. In view of the above foregoing reasons, the impugned order dated 04.04.2022 and the appellate order dated 04.09.2022 are hereby quashed and set aside and matter is remanded back to the respondent No.1 to decide show-cause notice dated 22.02.2022 after giving an opportunity of hearing to the petitioner. Without entering into merits of the matter, the matter is remanded back to enable respondent No.1 to pass fresh de novo order in the facts of the case. Such exercise shall be completed within twelve weeks from the date of copy of receipt of this order. Petition is accordingly discharged.
(BHARGAV D. KARIA, J)
(MAUNA M. BHATT,J)
Original judgment copy is available here.