GST assessment based on Facebook & social media postings- HC dismisses writ

Vasavi Wedding and Event Planners Vs State of Andhra Pradesh (Andhra Pradesh High Court)

The present Writ Petition came to be filed seeking issuance of a writ of Mandamus declaring the Assessment Order, dated 03.03.2022, passed by the Second Respondent for the tax period from 26.09.2017 to 31.03.2021 under G.S.T. Act, 2017, as illegal, arbitrary and in violation of principles of natural justice.

Pursuant to the Show Cause Notice, the husband of the Petitioner appeared before the Second Respondent on 10.02.2022 and obtained copies of the Facebook documents available with the Second Respondent and requested 10 days time to submit reply. Though the husband of the Petitioner explained to Second Respondent that they have not conducted any events in respect of documents available on Facebook and that the documents were uploaded only for advertisement purpose, and requested the Second Respondent to make available the information, if any, conducted by them with other documentary evidence, however the Second Respondent did not provide any such information except the Facebook documents. It is said that, as the husband of the Petitioner again fallen ill and was taken to Hyderabad for treatment; reply could not be submitted within the said 10 days.

 It is said that, though the husband of the Petitioner brought to the notice of the Second and Third Respondents that due to COVID-19 1st and 2nd wave, no events were conducted from March 2020 to July 2021 and that from July 2021 onwards events were permitted with limited persons; levying of tax from March 2020 to March 2021 is not justified and requested to drop proposed levy of tax. But, the Second Respondent without waiting for the explanation of the Petitioner, passed an Assessment Order, dated 03.03.2022, confirming the levy of I.G.S.T. of Rs.18,00,000/-, C.G.S.T. and S.G.S.T. of Rs 26,55,000/-, respectively. It is said that the action of the Second Respondent in passing the Assessment Order without receiving objections from the Petitioner as arbitrary, illegal and against the principles of natural justice.

It is also said that the Audit Officer without following the procedure contemplated under Sections 71 & 74 of A.P. G.S.T. Act, and without giving an opportunity to the Petitioner to file objections, passed the Assessment Order. Thus, Second and Third Respondent have arbitrarily levied tax for the period from 07.03.2020 to 31.03.2021.

Insofar as the first contention raised, that the Petitioner was not heard and no opportunity was given to him, may not be correct, for the reason that, a perusal of the Order shows that the Petitioner was given the opportunity of raising objections to the notice issued. It also shows that, a notice for personal hearing was also issued, pursuant to which, the Petitioner sought additional time, which was also granted, but the Petitioner never responded thereafter. Therefore, it cannot be said that, there was any violation of principles of natural justice.

Coming to the second contention i.e., the Assessment Order came to be passed by the Second Respondent basing on Facebook details and social media postings. A perusal of the Order impugned, prima facie, show that the authorities gathered information from the platform of the Facebook, which is used for promotion of business and basing on that G.S.T. was assessed.

In view of the above, prima facie it cannot be said that the Petitioner has not conducted any event during the relevant period.

Hence, we do not want to go into these factual aspects and, accordingly, the Writ Petition is dismissed giving liberty to the Petitioner to approach the Appellate Authority and avail the remedy by putting forth the grievances on the factual aspects. It is made clear that any observations made in this order are only for the purpose of passing this order and the same shall not influence the Appellate Authority while deciding the matter, in case any Appeal is filed. No order as to costs.

FULL TEXT OF THE JUDGMENT/ORDER OF ANDHRA PRADESH HIGH COURT

1) Heard Sri. Singam Srinivasa Rao, learned Counsel for the Petitioner and the learned Government Pleader for Commercial Taxes.

2) The present Writ Petition came to be filed seeking issuance of a writ of Mandamus declaring the Assessment Order, dated 03.03.2022, passed by the Second Respondent for the tax period from 26.09.2017 to 31.03.2021 under G.S.T. Act, 2017, as illegal, arbitrary and in violation of principles of natural justice.

3) The facts, which lead to filing of the present Writ Petition, are as under:-

i. It is said that, the Petitioner is a registered taxpayer under Andhra Pradesh Goods and Services Tax Act, 2017 [‘A.P.S.G.S.T. Act’], with a trade name M/s. Sri Vasavi Wedding and Event Planners and an assessee on the roles of Second Respondent. It is said that the Petitioner is engaged in the business of event management. It is said that the Effective Date of Registration [‘EDR’] of the Petitioner is from 01.07.2017 and the said registration was cancelled from 01.08.2020 on the application made by the Petitioner.

ii. It is said that, the Petitioner has filed GSTR 3B returns from July 2017 to January 2020 disclosing the taxable turnover and taxes paid.

iii. In the month of August 2018, the husband of the Petitioner suffered a paralytic stroke and was under medical treatment at Hyderabad in a Rehabilitation Centre and, as such the Petitioner could not conduct event managements except small events up to January 2020 for livelihood. In the month of August 2020, the husband of the Petitioner again had an attack of brain paralysis and was bedridden as such no business was done. It is said that the Petitioner applied for cancellation of GST registration. It is further said that due to COVID-19 from March 2020 up to August 2021, no permission was granted to conduct functions having huge gathering except limited members.

iv. However, pursuant to the authorization issued by the Joint Commissioner (ST), vide GSTIN-01, dated 05.10.2021, under Section 71(1) of A.P. G.S.T. Act, the Second Respondent visited the premises of the Petitioner Firm on 05.11.2021. By that time, both the Petitioner and her husband were in Hyderabad for medical treatment of the husband of the Petitioner. It is said that the Petitioner gave a statement, dated 01.12.2021, to the Second Respondent explaining the above facts and also furnishing details of turnovers disclosed in GSTR 3B returns from July 2017 to March 2020. While so, the Second Respondent issued a Show Cause Notice, dated 06.01.2022, proposing to levy IGST of Rs 18,00,000/-, CGST of Rs 26,55,000/- and SGST of Rs 26,55,000/-, for conducting major Events by the Petitioner and her husband.

v. Pursuant to the Show Cause Notice, the husband of the Petitioner appeared before the Second Respondent on 10.02.2022 and obtained copies of the Facebook documents available with the Second Respondent and requested 10 days time to submit reply. Though the husband of the Petitioner explained to Second Respondent that they have not conducted any events in respect of documents available on Facebook and that the documents were uploaded only for advertisement purpose, and requested the Second Respondent to make available the information, if any, conducted by them with other documentary evidence, however the Second Respondent did not provide any such information except the Facebook documents. It is said that, as the husband of the Petitioner again fallen ill and was taken to Hyderabad for treatment; reply could not be submitted within the said 10 days.

vi. It is said that, though the husband of the Petitioner brought to the notice of the Second and Third Respondents that due to COVID-19 1st and 2nd wave, no events were conducted from March 2020 to July 2021 and that from July 2021 onwards events were permitted with limited persons; levying of tax from March 2020 to March 2021 is not justified and requested to drop proposed levy of tax. But, the Second Respondent without waiting for the explanation of the Petitioner, passed an Assessment Order, dated 03.03.2022, confirming the levy of I.G.S.T. of Rs.18,00,000/-, C.G.S.T. and S.G.S.T. of Rs 26,55,000/-, respectively. It is said that the action of the Second Respondent in passing the Assessment Order without receiving objections from the Petitioner as arbitrary, illegal and against the principles of natural justice.

vii. It is also said that the Audit Officer without following the procedure contemplated under Sections 71 & 74 of A.P. G.S.T. Act, and without giving an opportunity to the Petitioner to file objections, passed the Assessment Order. Thus, Second and Third Respondent have arbitrarily levied tax for the period from 07.03.2020 to 31.03.2021.

4) Singam Srinivasa Rao, learned Counsel for the Petitioner, mainly submits that, the Order passed by the Second Respondent without providing an opportunity of hearing, is in violation of principles of natural justice. He further submits that, the Assessment Order passed by the Second Respondent is purely based on Facebook details and social media postings. In other words, his argument appears to be that, without any event being conducted by the Petitioner, the Authorities have burdened him with liability. Though, other grounds are referred to by the Petitioner, but the learned Counsel for the Petitioner mainly pressed the two grounds, referred to above.

5) The same is opposed by the learned Government Pleader for Commercial Taxes, stating that many factual aspects are involved, which are required to be adjudicated by the Tribunal and definitely not by this Court under Article 226 of the Constitution of India. He further submits that, from the personal window of the Petitioner, information has been gathered, which clearly indicate that the Petitioner has conducted many events, the details of which were shown in the said platform.

6) The point that arises for consideration is, whether the Petitioner is entitled for the relief claimed?

7) Insofar as the first contention raised, that the Petitioner was not heard and no opportunity was given to him, may not be correct, for the reason that, a perusal of the Order shows that the Petitioner was given the opportunity of raising objections to the notice issued. It also shows that, a notice for personal hearing was also issued, pursuant to which, the Petitioner sought additional time, which was also granted, but the Petitioner never responded thereafter. Therefore, it cannot be said that, there was any violation of principles of natural justice.

8) Coming to the second contention i.e., the Assessment Order came to be passed by the Second Respondent basing on Facebook details and social media postings. A perusal of the Order impugned, prima facie, show that the authorities gathered information from the platform of the Petitioner, which is used for promotion of business and basing on that G.S.T. was assessed. The same is as under:

9) In view of the above, prima facie it cannot be said that the Petitioner has not conducted any event during the relevant period.

10) Hence, we do not want to go into these factual aspects and, accordingly, the Writ Petition is dismissed giving liberty to the Petitioner to approach the Appellate Authority and avail the remedy by putting forth the grievances on the factual aspects. It is made clear that any observations made in this order are only for the purpose of passing this order and the same shall not influence the Appellate Authority while deciding the matter, in case any Appeal is filed. No order as to costs.

11) Consequently, miscellaneous petitions, if any, pending shall stand closed.