Case Law Details

Case Name : Daman Textiles Vs Union of India (Punjab and Haryana High Court)
Appeal Number : CWP No. 20909-2023
Date of Judgement/Order : 05/10/2023
Related Assessment Year :

Daman Textiles Vs. Union of India (Punjab and Haryana High Court)

In the present case, contended that: (i) the impugned actions are contrary to section 6A of the CGST Act, 2017; (ii) there is clear duplication of demand; (iii) show cause notice was not served and personal hearing was not granted before passing the impugned order. The Hon’ble High Court of Punjab and Haryana, set aside the impugned order and allowed the petition. Here is a summary of the case:

Facts of the Case:

  • Daman Textiles, the petitioner, is a dealer in textiles registered with the State Authorities and availed input tax credit.
  • The Central GST authorities issued a show cause notice on 09.03.2018, alleging that the supplier is a non-genuine tax payer at bogus entities.
  • A second show cause notice was issued by the State GST authorities on 23.11.2022, covering the same issue and period. This notice was not served, and an order confirming the demand was passed.
  • The petitioner contended that the actions taken were contrary to section 6A of the CGST Act, 2017, there was a clear duplication of demand, and the show cause notice was not served, and personal hearing was not granted before passing the impugned order.

High Court’s Decision:

  • The Hon’ble High Court set aside the impugned order and allowed the petition.
  • The Court found that there was a clear duplication of demand, as the same cause of action was covered by two show cause notices.
  • It was noted that the show cause notice dated 23.11.2022 was not served, and no opportunity of personal hearing was provided before passing the impugned order.
  • The Court, based on the statement made by the State’s counsel, remanded the matter back to the adjudicating authority to pass a fresh order.
  • The fresh order should be passed after serving a copy of the show cause notice and hearing the petitioner.
  • The impugned order dated 25.01.2023, confirming the tax liability, interest, and penalty, was set aside.

Key Points:

  • The petitioner successfully argued that the actions taken were contrary to the CGST Act, and there was a violation of procedural fairness.
  • The Court emphasized the importance of providing an opportunity of hearing before passing orders affecting the rights of the petitioner.
  • The case was argued by Ld. Counsel Bharat Raichandani.

FULL TEXT OF THE JUDGMENT/ORDER OF PUNJAB & HARYANA HIGH COURT

The present petition has been filed seeking quashing of show cause notice in Form GST DRC-01 bearing No. AW/FGS/294 dated 23.11.2022 (P-8) as well as impugned order dated 25.01.2023 (P-1), vide which the tax liability has been imputed upon the petitioner firm on account of inadmissible ITC claimed from bogus firms.

Issue notice of motion.

On asking of the Court, Ms. Anu Pal, Sr DAG Punjab and Mr. Sourabh Goel, Sr. Panel counsel, accepts notice on behalf of respondent-State and respondent-department respectively.

The precise grievance of the petitioner before this Court is that respondent No. 4 has already issued a show cause notice dated 09.03.2018 (P-4) for the same transaction and for the same period. But now again a fresh show cause notice has been issued to the petitioner in Form GST DRC-01 dated 23.11.2022 (P-8) and without opportunity of personal hearing, the impugned order has been passed on 25.01.2023 confirming the tax liability of Rs.24,60,526/-along with interest amounting to Rs.19,55,560/- and penalty amounting to Rs.12,30,264/- under Section 74 (11) of the CGST/SGST Act, 2017.

Learned counsel submits that the two show cause notices on the same cause of action are liable to be set aside and further no opportunity of hearing was provided to the petitioner before passing the impugned order.

Learned State counsel on instructions from Sh. Shinee Singh, Assistant Ludhiana-3 has informed the Court that it is right that no opportunity of hearing was given to the petitioner.

In view of the above factual position, the present petition is allowed and impugned order dated 25.01.2023 (P-1) is set aside. A liberty is given to the respondent-department to pass fresh order, after affording opportunity of hearing to the petitioner and after serving show cause notice dated 23.11.2022 (P-8).

Download Judgment/Order

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