Korba Steel Castings Vs State of Chhattisgarh (Chhattisgarh High Court)
Summary : The Chhattisgarh High Court, in Korba Steel Castings Vs State of Chhattisgarh, granted relief to a taxpayer challenging an ex parte GST assessment order dated 13 December 2023, involving a demand of Rs. 8,17,771.69, including interest and penalty. The petitioner approached the High Court under Article 226 of the Constitution, contending that the assessment had been completed without issuing a show cause notice or providing an opportunity of hearing. The petitioner alleged non-compliance with Sections 61, 73 and 169 of the GST Act, 2017, and challenged the subsequent recovery proceedings initiated by the State Tax Department.
The dispute arose when the State Tax Officer, Korba Circle-II, issued a recovery notice dated 24 March 2026 under Section 79(1)(c) of the GST Act to M/s Maruti Aluminum Foil & Sheets, directing the third party to remit approximately Rs. 8.17 lakh from amounts payable to the petitioner. According to the petitioner, it became aware of the assessment order only after receiving information from the concerned supplier. The petitioner argued that the assessment proceedings violated the principles of natural justice because no effective opportunity had been provided to contest the proposed tax liability.
The State Government opposed the petition, maintaining that sufficient opportunities had been granted during the assessment proceedings but the petitioner had failed to respond. The Department also contended that the statutory limitation period for challenging the assessment order had already expired. Consequently, according to the State, the petitioner could not seek reopening of the proceedings merely by offering to deposit the disputed tax amount.
During the hearing, the petitioner expressed willingness to deposit 50% of the assessed liability and requested an opportunity to pursue the remedies available under the GST legislation. Considering this proposal, the High Court exercised its extraordinary jurisdiction under Article 226 of the Constitution to provide an opportunity for statutory appellate consideration. The Court permitted the petitioner to file an appeal against the assessment order dated 13 December 2023, subject to depositing Rs. 4,08,885.84, representing 50% of the assessed amount of Rs. 8,17,771.69.
The High Court directed that if the petitioner files the statutory appeal within one month from receiving a copy of its order, the appellate authority must decide the appeal on its merits without insisting upon compliance with the expired limitation period. The Court expressly condoned the delay, subject to the stipulated deposit, and clarified that the petitioner could raise all legally available defences, including objections concerning the ex parte assessment. The writ petition was accordingly disposed of. Importantly, the High Court did not itself annul the assessment or determine the underlying tax liability; those issues were left for consideration by the appellate authority.
FULL TEXT OF THE JUDGMENT/ORDER OF CHHATTISGARH HIGH COURT
1. The petitioner has filed this writ petition under Article 226 of the Constitution of India assailing the ex-parte assessment order dated 13.12.2023 (Annexure P/1) passed by the State Tax Officer, State Tax, Korba Circle-2 in Case No. 203 STO/SCRUT./2017-18 by which the State Tax Officer, State Tax has assessed the tax liability of the petitioner to the tune of Rs. 8,17,771.69/- after adding the interest and penalty. The petitioner has also challenged the notice dated 24.03.2026 (Annexure P/2) whereby he has been directed to pay the assessed tax amount.
2. The brief facts as reflected from the record are that the petitioner is challenging the ex-parte impugned order dated 13.12.2023, passed by the State Tax Officer, State Tax, Korba Circle-ll whereby the State Tax Officer has imposed the demand of Rs 8,17,771.69/- without issuing any show cause notice to the petitioner, and without following the mandate of Section 61, Section 73 and Section 169 of the Act of 2017. The record further reflects that the petitioner has also challenged the impugned notice dated 24.03.2026 issued by the respondent Authorities under Section 79(1)(c) of the Act of 2017 to the third party i.e. M/s Maruti Aluminum Foil & Sheets who is the supplier of the petitioner asking him to pay the liability to the tune of Rs 8,17,772/- from the amount payable to the petitioner.
3. Learned counsel for the petitioner would submit that the petitioner came to know about the passing of the impugned order only upon being informed of the same by its supplier, upon whom the respondent authorities had served a notice under Section 71(1)(C) of the Act of 2017. He would further submit that the impugned order has been passed without affording the petitioner an opportunity of hearing, thereby violating the principles of natural justice and fair play and would pray for allowing the instant petition.
4. On the other hand, learned State counsel would submit that the Department has given sufficient opportunity to the petitioner, but the petitioner has failed to give reply. Thus, he cannot complain about violation of principle of natural justice and the order passed by the department does not warrant interference and would pray for dismissal of the writ petition.
5. I have heard learned counsel for the parties and perused the record.
6. During midst of argument, learned counsel for the petitioner would submit that he is ready and willing to deposit 50% of the assessed tax liability i.e. Rs. 8,17,771.69/- and would submit that the petitioner may be given an opportunity to move an appropriate application for setting aside the ex parte order and thereafter, take recourse available to him under the law.
7. This was objected by learned counsel for the State and would submit that the statutory limitation period provided under the GST Act, 2017 has already been expired, therefore, no such request can be considered, even if the entire tax liability is deposited by the petitioner and would pray for dismissal of the petition.
8. Considering the submission made by learned counsel for the petitioner that he may be given an opportunity for moving an appropriate application for setting aside the ex parte order passed by the authority on the condition that he will deposit tax liability assessed by the State Tax Officer, State Tax vide impugned order dated 13.12.2023, thus, a case for interference by this Court to exercise its power conferred under Article 226 of the Constitution of India to do complete justice between the parties is made out. Accordingly, in view of the proposal given by the petitioner that he is ready to deposit 50% of the tax liability of Rs. 8,17,771.69/- which comes to Rs. 4,08,885.84/-, an opportunity is granted to the petitioner to prefer statutory appeal against the order dated 13.12.2023 (Annexure P/1) before the appellate authority as per the GST Act, 2017. It is further directed that in the eventuality of filing of the appeal within one month from the date of receipt of copy of the order, the appellate authority shall decide the appeal on its own merit without insisting for delay as this Court has already condoned the delay on condition of depositing of 50% of the tax liability of Rs. 8,17,771.69/- which comes to Rs. 4,08,885.84/- before the authorities as the depositing of amount is condition precedent for hearing the appeal by the department. It is also made clear that the petitioner is at liberty to take all the defense available to him under the law including passing of the ex parte order before the appellate authority who in turn shall decide the same in accordance with law.
9. With aforesaid observation and direction, the writ petition is disposed of.
