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Case Law Details

Case Name : Exide Industries Limited Vs Deputy Commissioner (CT) (Madras High Court)
Appeal Number : W.P.Nos.15405 and 15406 of 2023 and W.M.P.Nos.14945 to 14948 of 2023
Date of Judgement/Order : 11/05/2023
Related Assessment Year :

Exide Industries Limited Vs Deputy Commissioner (CT) (Madras High Court)

Exide Industries, a company engaged in the manufacture of lead-acid storage batteries, has filed writ petitions questioning the legality of orders passed by the Deputy Commissioner (CT) under Section 73 of the Central Goods and Services Tax Act, 2017. The petitioner argues that it was not granted sufficient time to respond to the show cause notice and that the impugned orders do not comply with the circular issued by the respondent. The Madras High Court examines the case and provides its judgment in this matter.

Analysis: The court observes that the respondent did not address the petitioner’s request for an extension of time in relation to three of the queries raised. Referring to Circular No.12/2022 issued by the respondent, the court emphasizes the importance of granting reasonable time for compliance and considering further extensions on a case-by-case basis. The impugned orders fail to provide reasons for the refusal or granting of adjournments, thereby violating the circular. Consequently, the court sets aside the orders and directs the respondent to give the petitioner a fair opportunity to submit explanations within a reasonable time. The respondent is instructed to pass fresh orders after considering the petitioner’s entire explanation and providing a personal hearing.

Conclusion: The Madras High Court allows the writ petitions filed by Exide Industries Limited and sets aside the impugned orders. The court emphasizes the need for reasonable time and adherence to procedural guidelines in dealing with show cause notices. The respondent is directed to fix a date for an inquiry, allowing the petitioner a minimum of 30 days to submit explanations on the pending queries. After considering the submissions, the respondent will pass final orders based on merits and provide a personal hearing to the petitioner.

FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT

In view of commonality of the issue involved and so also the parties, both these writ petitions are considered and decided by this common order.

2. These writ petitions have been filed calling into question the legality and validity of the orders dated 10.02.2023 passed by the respondent under Section 73 of the Central Goods and Services Tax Act, 2017, qua financial years 2019-2020 and 2018-2019, respectively.

3. The case of the petitioner is that it is a company incorporated under the provisions of the Companies Act, 1956, having its registered office at Kolkota, West Bengal, engaged in the business of manufacture of lead acid storage batteries; the petitioner is registered under the Goods and Services Tax Act; in furtherance of a show cause notice dated 15.12.2022 issued under Section 73 of the Central Goods and Services Tax Act, 2017, citing various grounds for levy of penalty and interest, the petitioner submitted its reply on 13.01.2023 and on the same day, concededly, the petitioner was afforded a personal hearing; subsequently, since further details were sought, on 23.01.2023, the petitioner gave details with regard to three of the six queries raised and sought time as regards the remaining three queries; however, the respondent proceeded to pass the impugned orders dated 10.02.2023.

4. This Court perused the impugned orders. The respondent has not adverted to the petitioner’s request with regard to extension of time in respect of three of the queries. Circular No.12/2022 dated 26.09.2022 issued by the respondent is brought to the notice of this Court by the learned counsel for the petitioner. Paragraph 6(b) of the said circular reads thus:

“b) Grant of reasonable time to file reply and dealing with adjournments:

The person to whom show cause notice is issued should be given sufficient and reasonable time, to prepare their reply. What is reasonable time depend on the facts and circumstances of the each case, however, giving too short time for compliance of a notice will amount to denial of reasonable opportunity. Therefore, the show cause notice shall be issued granting a minimum of 15 days time or such time, as prescribed in the provisions of the Act, to file reply.

Further extension of time/adjournment shall be granted by the Assessing / Adjudicating Officer, on case to case basis, according to the facts and circumstances of the case and duly recording the reasons thereof. Where the Assessing/Adjudicating Authorities refuses any adjournment, such decision shall be exercised with sound reason and not in an arbitrary or capricious manner. Further, the communication of granting time or refusal to grant time shall also be sent to the assessee.”

5. From the above, it is crystal clear that reasonable opportunity ought to be given to a person to show cause and depending upon the facts of each case, even further extension of time can be granted by the Assessing / Adjudicating Officer. In any event, the decision to refuse or extend time ought to be exercised with sound reasons and not in an arbitrary or capricious manner. The circular dated 26.09.2022 of the respondent also clearly stipulates that the communication granting time or refusal to grant time, shall also be sent to the assessee.

6. This Court finds that the impugned orders do not discuss the reasons for extension of time at all, leave alone giving its finding either granting or refusing the adjournment. In such circumstances, it is clear that there is a clear violation of the circular of the respondent themselves and it would be just and proper that the petitioner is afforded a fair opportunity to submit its explanation in respect of three pending queries within a reasonable time and thereupon, the respondent may pass fresh orders considering the entire explanation submitted by the petitioner, including the earlier explanations submitted by it.

7. In such perspective of the matter, the impugned orders dated 10.02.2023 are set aside and the respondent is at liberty to fix a date for enquiry, giving a minimum of 30 days’ time to enable the petitioner to submit its explanation with regard to the three pending queries or any further explanation that may be required by the respondent and thereupon, pass final orders, on merits, after affording personal hearing to the petitioner.

In fine, these writ petitions stand allowed. Costs made easy. Connected W.M.Ps. are closed.

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