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2025 (6) TMI 1787 - HC - GSTViolation of principles of natural justice - ex-parte assessment order - period 01.10.2018 to 31.03.2019 - HELD THAT - This writ application may be disposed of in similar terms as has been done by a learned co-ordinate Bench of this Court in M/s Maa Sunaina Construction Private Limited Vs. The Union of India and Others 2025 (1) TMI 120 - PATNA HIGH COURT where it was held that As of now pre-deposit has been reduced to ten per cent but however the same is made effective only from 01.11.2024. It is an admitted position that the GST Tribunals have not been constituted as yet and there is no possibility of an appeal being filed prior to 01.11.2024. In such circumstance we direct that the assessee on payment of ten per cent of the tax amounts in dispute shall be entitled to stay of recovery till the Tribunal is constituted and an appeal is filed within such term as provided therein. Both sides agree that the subject matter of the present writ application and the issues raised by the petitioner in the present writ application may be agitated before the Tribunal as and when constituted by the respondent authorities. Application disposed off.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court in this writ application include:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1 & 2: Validity of Summary Assessment Orders and Demand Order Relevant Legal Framework and Precedents: The assessment and demand orders were issued under the CGST/BGST Rules, 2017. The law mandates that assessments be conducted after due examination of records and allowing the assessee an opportunity of being heard, except in cases where summary assessments are permissible under specific statutory provisions. The Court referred to a recent coordinate Bench decision in CWJC No. 14554 of 2024 (M/s Maa Sunaina Construction Private Limited Vs. Union of India and Others), which dealt with similar issues. Court's Interpretation and Reasoning: The Court noted that the summary assessments were passed ex-parte and imposed a total liability of Rs. 84,644/- including CGST, SGST, and interest. However, the petitioner contended that these orders were passed without proper examination of records and supporting documents, including the annual return filed. Key Evidence and Findings: The petitioner relied on the annual return and payment certificates as proof of tax compliance. The respondents justified the assessment and demand orders based on their records. Application of Law to Facts: The Court observed that the petitioner's challenge to the ex-parte nature of the orders and the failure to consider documentary evidence raised a legitimate grievance. However, the Court also noted that the statutory remedy of appeal under Section 112 of the B.G.S.T. Act exists for such disputes. Treatment of Competing Arguments: The respondents argued for dismissal based on the validity of the assessment and demand orders. The petitioner emphasized procedural lapses and non-consideration of Form 26AS and payment certificates. The Court balanced these by referring to the coordinate Bench's directions, which provide a mechanism to protect the petitioner's interests while allowing the authorities to proceed lawfully. Conclusions: The Court did not quash the assessment or demand orders outright but disposed of the writ petition by granting interim relief subject to deposit of 10% of the disputed tax amount and directing the petitioner to pursue statutory appeals once the Tribunal is constituted. Issue 3: Validity of Appellate Order Dismissing Appeal on Technical Ground Relevant Legal Framework and Precedents: The appellate order dismissed the petitioner's appeal on the ground that the payment certificate was unsigned by the Executive Engineer, ignoring Form 26AS, which is a statutory document evidencing tax deducted at source. Court's Interpretation and Reasoning: The Court found that the appellate authority's rejection of the payment certificate on a technicality without considering Form 26AS was erroneous. Form 26AS is a credible and authoritative document reflecting tax deductions and payments. Key Evidence and Findings: The petitioner produced Form 26AS and payment certificates as proof of tax compliance. The appellate authority's failure to consider these was a critical flaw. Application of Law to Facts: The Court recognized that ignoring Form 26AS undermines the petitioner's right to a fair hearing and proper adjudication. However, since the Tribunal was not yet constituted, the Court refrained from interfering directly with the appellate order. Treatment of Competing Arguments: The respondents relied on the appellate order's reasoning. The petitioner argued for reconsideration based on Form 26AS. The Court acknowledged the petitioner's grievance but deferred substantive adjudication to the Tribunal. Conclusions: The Court directed that the petitioner be allowed to raise these issues before the Tribunal once constituted, thereby preserving the petitioner's right to appeal and seek redress. Issue 4: Stay of Coercive Recovery Actions Relevant Legal Framework and Precedents: Section 112(9) of the B.G.S.T. Act provides for stay of recovery proceedings on deposit of a specified portion of the disputed tax amount. The coordinate Bench judgment in CWJC No. 14554 of 2024 provided guidelines for such stay in the absence of a constituted Tribunal. Court's Interpretation and Reasoning: The Court emphasized that the petitioner cannot be deprived of the statutory benefit of stay merely because the Tribunal was not constituted by the respondents. The Court found it equitable to grant stay on deposit of 10% of the disputed tax amount. Key Evidence and Findings: The petitioner had deposited some amount earlier under Section 107(6) of the B.G.S.T. Act, but the balance recovery actions were challenged. Application of Law to Facts: The Court applied the principle of balance of equities, protecting the petitioner from coercive recovery while ensuring the State's interest through partial deposit. Treatment of Competing Arguments: The respondents sought to proceed with recovery. The petitioner sought protection from coercive action. The Court's order balanced these competing interests. Conclusions: The Court stayed recovery proceedings and ordered release of any attachment of bank accounts upon compliance with deposit conditions. Issue 5: Direction to Pass Fresh Assessment Order Relevant Legal Framework and Precedents: The petitioner sought a direction to pass a fresh assessment after considering the annual return filed. The law requires that assessments be made after due consideration of all relevant documents and records. Court's Interpretation and Reasoning: The Court did not explicitly direct fresh assessment but indicated that the petitioner's grievances could be agitated before the Tribunal once constituted, which would consider all relevant materials including annual returns. Application of Law to Facts: Since the Tribunal was not functional, the Court refrained from issuing direct directions to reassess but preserved the petitioner's right to appeal. Conclusions: The petitioner was directed to pursue statutory remedies before the Tribunal for fresh adjudication. Issue 6: Legality of Impugned Orders Without Proper Examination Relevant Legal Framework and Precedents: Principles of natural justice require that orders affecting rights be passed after examination of records and allowing the affected party an opportunity to be heard. Court's Interpretation and Reasoning: The petitioner's contention that the impugned orders were passed without examining records and supporting materials was acknowledged. However, the Court noted that the remedy lies in statutory appeals and did not interfere directly. Conclusions: The Court disposed of the writ petition with directions for statutory appeal and interim relief, implicitly recognizing the petitioner's grievance but deferring substantive adjudication. 3. SIGNIFICANT HOLDINGS The Court, relying on the coordinate Bench judgment, held: "Subject to deposit of a sum equal to 10 percent of the amount of tax in dispute, if not already deposited, in addition to the amount deposited earlier under Sub-Section (6) of Section 107 of the B.G.S.T. Act, the petitioner must be extended the statutory benefit of stay under Sub-Section (9) of Section 112 of the B.G.S.T. Act. The petitioner cannot be deprived of the benefit, due to non-constitution of the Tribunal by the respondents themselves. The recovery of balance amount, and any steps that may have been taken in this regard will thus be deemed to be stayed." Further, the Court established the principle that in the absence of a constituted Tribunal, petitioners are entitled to interim relief by way of stay of recovery on partial deposit of disputed tax and are required to file appeals once the Tribunal is constituted: "The statutory relief of stay, on deposit of the statutory amount, however in the opinion of this Court, cannot be open ended. For balancing the equities, therefore, the Court is of the opinion that since order is being passed due to non-constitution of the Tribunal by the respondent-Authorities, the petitioner would be required to present/file his appeal under Section 112 of the B.G.S.T. Act, once the Tribunal is constituted and made functional and the President or the State President may enter office. The appeal would be required to be filed observing the statutory requirements after coming into existence of the Tribunal, for facilitating consideration of the appeal." Finally, the Court clarified the consequences of non-filing of appeal within the stipulated time: "In case the petitioner chooses not to avail the remedy of appeal by filing any appeal under Section 112 of the B.G.S.T. Act before the Tribunal within the period which may be specified upon constitution of the Tribunal, the respondent-Authorities would be at liberty to proceed further in the matter, in accordance with law." The Court disposed of the writ application accordingly, thereby preserving the petitioner's right to statutory appeal and protection against coerc
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