Case Law Details
DRB Infratstructure Pvt Ltd Vs State of West Bengal And Ors (Calcutta High Court)
Introduction: The Calcutta High Court recently delivered a significant judgment pertaining to an order issued under Section 129(3) of the WBGST/CGST Act. The case, involving DRB Infrastructure Pvt Ltd vs. State of West Bengal and Others, revolved around a penalty imposed in the absence of taxable supply. This article offers a comprehensive analysis of the court’s decision, focusing on the inadequacy of reasons provided and the failure to consider the petitioner’s objections.
Detailed Analysis:
1. Background: The writ petitioner, DRB Infrastructure Pvt Ltd, challenged an order dated 15th February, 2023, issued under Section 129(3) of the WBGST/CGST Act. This order was a response to the seizure of a truck owned by the petitioner and the subsequent demand made under the West Bengal GST Act and Rules, 2017.
2. Detailed Response: In response to a show-cause notice, the petitioner submitted a comprehensive response on 13th February, 2023.
3. Impugned Order: The respondent authorities, through the impugned order, rejected the objections raised by the petitioner and imposed a demand of Rs. 8,13,600/-. However, the order lacked essential reasoning and failed to address the petitioner’s objections adequately. Of particular concern was the petitioner’s query regarding the imposition of a penalty when no tax was due, and no supply had been made. The impugned order did not address this key issue.
4. Importance of Reasoning: The Calcutta High Court stressed the significance of providing sound reasoning to support any decision. The impugned order’s failure to offer clear reasons rendered it unsustainable.
5. Remand and Instructions: The court set aside the impugned order and remanded the matter to the proper officer for re-evaluation of the petitioner’s response dated 13th February, 2023. The officer was instructed to issue a reasoned order within eight weeks from the date of communication of the court’s directive. Furthermore, the petitioner was directed to maintain the bank guarantee until the final resolution of the representation.
Conclusion: The recent ruling by the Calcutta High Court in the case of DRB Infrastructure Pvt Ltd vs. State of West Bengal and Others highlights the importance of providing clear and reasoned decisions in tax-related matters, especially when penalties are involved. The court’s decision to set aside the impugned order and order a re-evaluation ensures that taxpayer objections are thoroughly considered and addressed.
This judgment underscores the commitment of the judiciary to uphold principles of transparency, fairness, and due process in tax matters. It serves as a reminder to tax authorities to provide comprehensive reasoning when imposing penalties, taking into account the specific circumstances and objections raised by taxpayers.
FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT
The principal grievance of the writ petitioner is directed against an order dated 15th February, 2023 passed under Section 129 (3) of the WBGST/CGST Act.
It is submitted on behalf of the petitioner that in or about 2018 in the course of carrying out construction work at Arunachal Pradesh, a truck belonging to the petitioner had been seized and a demand had been raised under the West Bengal GST Act and Rules, 2017.
Pursuant to such show-cause notice, the petitioner had given a detailed response dated 13th February, 2023.
By the impugned order, the respondent authorities have rejected the objection raised on behalf of the writ petitioner and raised a demand for Rs.8, 13,600/-.
By an interim order dated 16th June, 2023, the petitioner was directed to furnish a bank guarantee and permitted to release the trailers loaded with machines. It is submitted on behalf of the petitioner that in terms of the order dated 16th June, 2023, the bank guarantee had been furnished and the same is kept with the Senior Joint Commissioner of Revenue. A copy of the said bank guarantee is also furnished to the State authorities.
The impugned order records that the objections filed by the petitioner had been perused and were not acceptable in the eye of law. No reasons have been provided in the impugned order. Nor does the impugned order deal with the objections raised by the petitioner. The justification and reasonableness of a conclusion can only depend on the reasons provided in support thereof which the impugned order fails to provide. In particular, the petitioner had raised an issue as to whether any penalty could have been charged in the facts and circumstances of the case since no tax was due and payable and the petitioner had not made any supply. Such objection raised by the petitioner ought to have been dealt with in the impugned order. The conclusion reached at by the respondent no.3 is bereft of any reasons whatsoever. There has been no adjudication on the merits of the case.
Accordingly, the impugned order is unsustainable and set aside. The matter is remanded back to the proper officer to adjudicate the response dated 13 February, 2023 and pass a reasoned order within eight weeks from the date of communication of this order.
In the meantime, the petitioner is directed to keep the bank guarantee alive until final disposal of the representation.
With the aforesaid directions, WPA/509/2023 stands disposed of.
