Kloud Data Labs Private Limited and Another Vs Deputy Commissioner of State Tax (Bombay High Court)
The Bombay High Court addressed a petition challenging an order dated 09.01.2023 under Section 73(9) read with Rule 142 of the Maharashtra GST Act, by which the petitioners were assessed to GST of Rs.14,77,371/- for the period July 2017 to March 2018, inclusive of interest and penalty. The petitioners argued that their GST registration had been cancelled w.e.f. 01.02.2020, and since the cancellation order dated 28.04.2020 did not indicate any recoverable amount, the assessment under Section 73 was without jurisdiction. The Court rejected this argument, clarifying that Section 29(3) of the GST Act mandates that cancellation of registration does not relieve a person of tax liability for periods prior to cancellation. The Court observed that the amounts shown as nil in the cancellation order were based on self-assessment and were without prejudice to any dues determined subsequently, confirming the Department’s authority to assess post-cancellation.
The petitioners further contended that the impugned order was bad in law for denial of an opportunity of hearing. The Court examined notices dated 01.11.2021, 14.12.2021, 02.12.2022, and GST portal screenshots dated 26.02.2024, noting that no date, time, or venue for personal hearing had been provided. Section 75(4) of the GST Act mandates that an opportunity of hearing must be granted when requested in writing by the person chargeable or when any adverse decision is contemplated. The Court held that even if no reply was filed, the petitioners were entitled to justify their self-assessment, and the statutory requirement of hearing had not been complied with. Consequently, the Court set aside the order dated 09.01.2023 and remitted the matter to the respondent to grant an opportunity of hearing under Section 75(4).
