Prem Highway Services Vs Union of India (Patna High Court)
Summary: The petitioner, M/S Prem Highway Services, a dealer in petroleum products, challenged the adjudication order dated 29.04.2024 imposing tax liability of Rs. 1,25,71,936/-. The petitioner contended that it dealt in Motor spirit and High-speed diesel, which were non-GST items and continued to be taxable under the earlier VAT regime, as GST levy on such petroleum products under Section 9(2) of the CGST/BGST Act was subject to issuance of the requisite notification. It was further submitted that the petitioner had filed its return for 2018-19 and that the Assessing Authority had exceeded its jurisdiction by assessing tax on invoices relating to Motor spirit and High-speed diesel.
The State opposed the writ petition, submitting that the petitioner had neither responded to the show cause notice nor produced documents establishing that the invoices related to non-GST items, and further contended that the impugned order also imposed tax on some GST items. The Patna High Court noted that the petitioner had produced its Registration Certificate and tax invoices in support of its claim.
The Court observed that Motor spirit and High-speed diesel were non-GST items and that it appeared that the Adjudicating Authority had imposed tax liability upon such items. According to the Court, imposing tax liability on non-GST items travelled to the root of the matter. Despite the delay in approaching the Court, the writ application was entertained because the Court found, prima facie, that the Adjudicating Authority lacked jurisdiction to impose GST upon the non-GST items.
The assessment order dated 29.04.2024 was consequently set aside and the matter was remanded to the Adjudicating Authority for fresh determination of tax liability. The petitioner was directed to appear before the Adjudicating Authority within 20 days with all documents and its reply to the show cause notice. The authority was directed to provide personal hearing, fix the hearing date with advance proper intimation, and pass a fresh assessment order in accordance with law within two months from the date of the petitioner’s appearance. The writ application was accordingly disposed of.
FULL TEXT OF THE JUDGMENT/ORDER OF PATNA HIGH COURT
1. The petitioner has filed the present writ application for quashing the order of the Adjudicating Authority dated 29.04.2024, whereby a tax liability of Rs. 1,25,71,936/- has been imposed and demand notice has been served upon the petitioner.
2. Learned counsel for the petitioner submits that the petitioner is a dealer of petroleum products and deals in sale of Motor spirit and High-speed diesel, which are non-GST items and are taxable under Section 9(2) of the CGST/BGST Act, subject to issuance of notification. The notification has not yet been issued by the Government and these items are being taxed under the old regime of VAT Act.
3. Learned counsel further submits that the petitioner had filed his return for the year 2018-19. Further, the Assessing Authority while passing the order, has gone beyond jurisdiction and assessed the tax on the invoices of Motor spirit and High-speed diesel. A tax liability of Rs. 1,25,71,936/- has been imposed on the petitioner by the Adjudicating Authority.
4. On the other hand, learned counsel for the State argued that the petitioner neither responded to the show cause notice issued by the Assessing Authority nor produced any document to show that the products’ invoices pertain to the non-GST items. It has further been submitted that from the impugned order, it would be evident that tax has been imposed upon some other GST items also.
5. We have heard learned counsel for the parties and have gone through the materials on record. It appears that the petitioner is a dealer of petroleum products. In support of his claim, the petitioner has produced the Registration Certificate and tax invoices before this Court by way of the present writ application. Admittedly, the petroleum products, i.e. Motor spirit and High-speed diesel are non-GST items upon which it appears that the Adjudicating Authority has imposed tax liability on the petitioner. Imposing tax liability on non-GST items travels to the root of the matter.
6. As such, even if there is a delay in approaching this Court, we are entertaining the present writ application and considering the above discussion and the prima facie finding of this Court that the Adjudicating Authority lacks jurisdiction in imposing GST upon the non-GST items, we are inclined to interfere with the order of assessment.
7. Accordingly, the order of assessment order dated 29.04.2024 is set aside. The matter is remanded back to the Adjudicating Authority for fresh determination of tax upon the petitioner entity.
8. The petitioner is directed to appear before the Adjudicating Authority within 20 days along with his entire documents and reply to the show cause notice in support of which he is placing his claim and the same shall be considered by the Adjudicating Authority in accordance with law after giving personal hearing to the petitioner.
9. The Adjudicating Authority is directed to fix the date of hearing with advance proper intimation to the petitioner and shall pass a fresh assessment order in accordance with law within a period of two months from the date of appearance of the petitioner.
10. With the aforesaid direction, this writ application is disposed.
