Patna HC quashes GST demand as no opportunity of hearing was afforded to petitioner

In the matter of M/s Shashikant Singh Vs Union of India & others Civil Writ Jurisdiction Case No. 6509 of 2021) judgement dated 09.09.2021

Patna High Court quashes demand raised under GST as no opportunity of hearing was afforded to the petitioner

Brief fact of case: Respondent passed an order without affording adequate opportunity of hearing to the petitioner and recovered the demand amount after attachment of bank account of the petitioner.

Shri Brisketu Sharan Pandey, learned counsel for the petitioner has raised several contentions, including non[1]application of mind on the part of the authorities; the order passed without affording adequate opportunity of hearing; for extraneous factors, only to cover up inaction on the part of the authorities, who after attachment, recovered the amount from the petitioner’s Bank Account and that no adequate opportunity of hearing was afforded to the petitioner before carrying out the impugned action.

Relief claimed by petitioner:

1. For issuing writ of certiorari for quashing the Summary of Order (demand order issued in FORM GST DRC 07) dated 21.03.2020 issued for the tax period September 2018, December 2018 and March 2018 wherein a demand of tax, interest and penalty has been demanded from the Petitioner.

2. For issuing writ/writs, order/orders including the writ of certiorari for quashing the order dated 19.03.2020 issued for the tax period September 2018, December 2018 and March 2018 wherein a demand of tax of Rs. 26,81,102.00/-, interest of Rs. 1,97,061/- and penalty of Rs. 2,68,110/- totalling to Rs. 31,46,273/- for CGST and SGST has been levied against the Petitioner.

3. For issuing writ/writs, order/orders including the writ of mandamus to the Respondents directing them to bring on record the FORM DRC 01 and DRC 01A which was supposed to be issued to the Petitioner and served electronically through the GST Portal but was never served.

4. Further for issuing writ/writs, order/orders including the writ of certiorari and thereby quash the FORM DRC 01 and DRC 01A which was supposed to be issued to the Petitioner and served electronically through the GST Portal but was never served through such modes.

5. For issuing writ/writs, order/orders including the writ of certiorari and thereby quashing the attachment notice issued in FORM DRC 13 dated 09.01.2021 whereby notices have been issued to the third parties (including bank and customers) for the purpose of the recovery.

6. For issuing writ/writs, order/orders including the writ of Mandamus and thereby directing the Respondents including the Bank Respondent (Respondent No 9) to the unfreeze/unattach the Bank Account having A/c No. 10839120015 which was freezed/attached vide FORM DRC 13 dated 09.01.2021.

7. For issuing writ/writs, order/orders including the writ of Mandamus and thereby directing the Respondents to refund the amount already recovered in pursuance of the recovery of amount as demanded through FORM GST DRC 07 dated 21.03.2020.

8. For issuing writ/writs, order/orders including the writ of mandamus after remanding the case back to the assessing authority and directing him/her to assess the liability of the Petitioner afresh after considering the submissions and merits of the case and following all the due procedure as provided in the CGST/BGST Act .

9. For issuing writ/writs, order/orders including the writ of certiorari and thereby quashing the Notification No. 49/2019 Central Tax dated 09/10/2019 whereby and where under rules under the CGST Rules have been retrospectively amended which resulted into the current tax demand from the Petitioner.

10. For reading down section 16 (4) of the CGST/BGST Act in a manner which this court deems fit in order to enable the petitioner to claim its rightful input tax credit given the fact that the petitioner has filed its GST returns under section 39 of the act within the time period as extended by the Respondents.

11. For holding that GSTR 3B is not a return under Section 39 of the CGST Act.

12. For holding that the actions of Respondents of rejecting the utilization of Input Tax Credit by the Petitioner is violative of Article 265 of the Constitution of India.

13. For holding that the petitioner who failed to file return claiming Input Tax Credit for the period September 2018, December 2018 and March 2018 within the prescribed period of Section 16 of GST Act cannot be deprived of its genuine claim to avail Input on the purchase made by it during the aforesaid period specially when the time limit to file the return were extended by the Respondents only.

14. For issuing appropriate direction to Respondents No.1 to 3 to issue appropriate notification and thereby creating provision for extension in availment of Input Tax Credit u/s 16 of GST Act as and when extension is granted for filing of GST Returns – GSTR-1 and GSTR-3B.

15. For holding that the Section 164(3) of the CGST Act which gives the power to retrospectively amend the rules is ultravires and amounts to the excessive delegation of legislative powers.

16. For holding that the imposition of liability of tax, interest and penalty on Petitioner by the Respondent is illegal and void.

17. For holding that the Respondents cannot impose any liability of interest as well as tax on the Petitioner when there has been no loss of revenue to the state.

18. For holding that once the Petitioner has availed the Input Tax Credit by making entries in its books of account, he cannot be denied utilization of Input Tax Credit.

19. For directing the Respondents not to take any coercive action against the Petitioner until the Pendency of the proceedings.

20. To pass any other order/orders which it may deem fit in the facts and circumstances of the case and within the ends of equity, justice and good conscience.

Decision of Hon’ble Court:

The Hon’ble court directed the petitioner to appear before the said officer on 27th of September, 2021 at 10:30 A.M., if possible, through digital mode, who shall, after considering all the materials placed on record by the parties, pass a fresh and speaking order, in accordance with law, of course in compliance of principles of natural justice, within a period of two months from the date of appearance of the petitioner and also

The court also directed for de-freezing or de-attaching of the bank account(s) of the writ-petitioner, if attached in reference to the proceedings, subject matter of present petition. This shall be done immediately.