Harekrushna Sahoo Vs Chief Commissioner of CT and GST (Orissa High Court)
In Harekrushna Sahoo vs. Chief Commissioner of CT and GST, the Orissa High Court quashed a GST demand order issued under Section 73 of the Odisha Goods and Services Tax Act, 2017. The petitioner challenged the order dated February 22, 2024, arguing that the revenue authorities initiated proceedings under Section 73 without considering his reply dated April 25, 2022, which was submitted in response to a notice under Section 61. The petitioner contended that the order was issued without jurisdiction as the due process under Section 61 had not been followed.
The state tax authorities defended their decision, asserting that the petitioner had been given an opportunity to respond during the proceedings under Section 73. However, they were unable to demonstrate that the petitioner’s reply under Section 61 had been duly considered before escalating the matter to Section 73. The court observed that Section 61(2) mandates consideration of any explanation provided by the taxpayer before further action can be initiated under Section 73. Since the revenue authorities failed to follow this mandatory step, the court ruled that the initiation of proceedings under Section 73 was invalid.
Judicial precedents emphasize the importance of procedural fairness in tax matters. In Aluminium Industries Ltd. v. State of Kerala (1996 SCC 647), the Supreme Court held that tax authorities must adhere to statutory procedures and provide the taxpayer a fair opportunity to be heard. Similarly, in Sundaram Finance Ltd. v. ACIT (2018 SCC 394), the Supreme Court ruled that administrative actions must comply with legal prerequisites, reinforcing that orders passed without due process are unsustainable. The Orissa High Court applied this principle, reaffirming that non-consideration of a taxpayer’s response under Section 61 renders subsequent action under Section 73 procedurally flawed.
