Case Law Details
Bhikshu Metals Pvt Ltd & Anr. Vs State of Gujarat & Ors. (Gujarat High Court)
Gujarat High Court held that recovery on the basis of such summary of the order, in absence of any detailed order, passed under any of the provisions of the GST Act is liable to be quashed and set aside.
Facts- Respondent conducted a raid on the business premises of the petitioner. Thereafter, show cause notice was issued in FORM GST DRC-01 for tax period from 01.07.2017 to 31.03.2019 on the ground of availing wrong Input Tax Credit by the petitioners.
However, it is the case of the petitioners that after issuance of the summons dated 08.06.2020, the petitioners received summary of the order in FORM GST DRC-01 dated 30.06.2020 by Registered Post AD on 01.07.2020 in connection with the order passed by respondent for tax period from 01.07.2017 to 31.03.2017 u/s. 67(2) and 74 of the Gujarat Goods and Service Tax Act, 2017 and Central Goods and Service Tax Act, 2017.
Petitioner was asked to pay the tax interest and penalty of Rs.98,14,286/- towards the SGST and CGST for the year 2017-2018 and for the year 2018-2019, the petitioner Company was asked to pay the tax interest and penalty of Rs.1,18,00,395/- towards the SGST and CGST liability.
Thereafter, another summons was issued u/s. 70(1) of CGST Act on 05.08.2020 in FORM GST DRC – 07 for the summary of the order for the period from July, 2017 to March, 2018 asking the petitioner to pay Rs.66,66,979/- towards tax interest and penalty for SGST and Rs.31,47,307/- towards the CGST.
The respondent also issued the FORM GST DRC – 22 to the Bankers of the petitioner No.1 with whom the petitioner was maintaining the bank accounts. It is case of the petitioner that though respondent has served the FORM GST DRC-01 however, petitioner was never granted any opportunity of personal hearing.
Conclusion- Held that in absence of any order, for which, the summary of the order was issued on 25.01.2020, the same cannot be sustained and accordingly, the summary of the order dated 25.01.2020 in FORM GST DRC-01 is hereby quashed and set aside and consequent action for the recovery on the basis of such summary of the order in absence of any detailed order passed under any of the provisions of the GST Act is also hereby quashed and set aside including the attachment of any of the bank accounts of the petitioner.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
1. Heard learned advocate Mr.Chetan Pandya, for the petitioners and learned Asst. Government Pleader Mr.Chintan Dave, for the respondent.
2. By this petition under Article 226 of the Constitution of India the petitioner has prayed for following reliefs:
“13(a) To issue a Writ of Mandamus and/or writ of certiorari and/or any other writ order or directions, to quashing and setting aside FORM GST DRC-07 at Annexure – A to this petition and an order No.b612 dated 06.01.2020 alleged to have been passed for the tax period 01.07.2017 to 31.03.2019.
(b) To issue a writ of mandamus and/or writ of certiorari and/or any other writ order or directions, to quashing and setting aside FORM GST DRC-07 at Annexure – B & Annexure – C to this petition.
(c) To issue a writ of mandamus and/or writ of certiorari and/or any other writ order or directions, to quashing and setting aside FORM GST DRC-22 dated 08.2020 at Annexure – D collectively.
(d) Pending admission, final hearing and disposal of this petition, to stay implementation and operation of FORM GST DRC-07 at Annexure-A, Annexure-B & Annexure-C on such terms and condition that may deem fit and proper to the Hon’ble Court.”
3. The brief facts of the case are that respondent No.3 conducted a raid on the business premises of the petitioner 1-Company on 03.01.2020 and also had drawn a panchnama. On request of petitioner No.2 on account of the medical emergency, proceedings of the search was postponed to 06.01.2020 by sealing the business premises.
3.1 The search was continued on 01.2020 and the statement of the petitioner No.2 was recorded on the letter head of the petitioner – Company.
3.2 The show cause notice was issued in FORM GST DRC-01 for tax period from 01.07.2017 to 31.03.2019 on the ground of availing wrong Input Tax Credit by the petitioners – Company.
However, it is the case of the petitioners that after issuance of the summons dated 08.06.2020, the petitioners received summary of the order in FORM GST DRC-01 dated 30.06.2020 by Registered Post AD on 01.07.2020 in connection with the order passed by respondent No.3 for tax period from 01.07.2017 to 31.03.2017 under Sections 67(2) and 74 of the Gujarat Goods and Service Tax Act, 2017 and Central Goods and Service Tax Act, 2017. Petitioner No.1-Company was asked to pay the tax interest and penalty of Rs.98,14,286/- towards the SGST and CGST for the year 2017-2018 and for the year 2018-2019, the petitioner No.1–Company was asked to pay the tax interest and penalty of Rs.1,18,00,395/- towards the SGST and CGST liability.
3.3 Thereafter, another summons was issued under Section 70(1) of CGST Act on 05.08.2020 followed by communication dated 06.08.2020 in FORM GST DRC – 07 for the summary of the order for the period from July, 2017 to March, 2018 asking the petitioner to pay Rs.66,66,979/- towards tax interest and penalty for SGST and Rs.31,47,307/- towards the CGST.
3.4 The respondent also issued the FORM GST DRC – 22 to the Bankers of the petitioner No.1 with whom the petitioner No.1 – Company was maintaining the bank accounts.
3.5 It is case of the petitioner 1 that though respondent No.2 has served the FORM GST DRC-01 however, petitioner was never granted any opportunity of personal hearing to explain the circumstances in question nor any hearing had taken place on or before 06.01.2020.
3.6 Petitioner has therefore, challenged the orders before this Court with this aforesaid prayers.
4. Learned advocate Mr. Chetan Pandya, for the petitioner submitted that the respondent authorities have served the summary of the order without any detail order and the respondent authorities have tried to initiate the recovery action pursuant to the summary of the order. It was submitted that the respondent authorities have never passed any order under Section 74 of the GST Act but only summary of the order was issued to the petitioner.
5. It was therefore submitted that the impugned summary of the orders are required to be quashed and set aside and consequent action for the recovery on the basis of such summary of the order in absence of any detailed order and any of the provisions of the Act is also required to be quashed and set aside.
6. When a query was raised, learned Assistant Government Pleader Mr. Chintan Dave for respondent No.1 was not able to answer with regard to the issue of not serving of the detailed order passed under Section 74 of the GST Act. It was pointed out from the records of the respondent that only summary of the order is available in FORM GST DRC-01 passed under the Rule 142(5) of the Gujarat Goods and Service Tax Rules, 2017.
7. In absence of any order being passed, the summary of the order has no value in eye of law. Summary of the order is only issued so as to record the outstanding demand raised in the order passed under Section 74 of the GST Act.
8. On perusal of the summary order dated 06.01.2020 at Annexure A to the petition it only says the order b612, tax period order dated 06.01.2020, financial year :2019/20 and tax period :01.07.2017 to 31.03.2019 and issues involved is shown as DRC-1 and description of goods is HSN 72042190 and description shown is scrap and the details of demand is also mentioned having total of Rs.2,16,14,681/-.
9. On perusal of the above summary of the order, again a query was raised to learned Assistant Government Pleader Mr.Dave to make a statement at bar that there is no detail order in existence on the record of the respondents which is passed on 06.01.2020. Therefore, in absence of any order, for which, the summary of the order was issued on 25.01.2020, the same cannot be sustained and accordingly, the summary of the order dated 25.01.2020 in FORM GST DRC-01 is hereby quashed and set aside and consequent action for the recovery on the basis of such summary of the order in absence of any detailed order passed under any of the provisions of the GST Act is also hereby quashed and set aside including the attachment of any of the bank accounts of the petitioner.
10. The respondents are directed to pass an appropriate order for lifting the attachment of the bank accounts of the petitioner forthwith.
11. With the aforesaid directions, the petition is disposed of. Notice discharged.
12. Direct service permitted through E-mail.
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