2021 (2) TMI 433 - HC - GST

Initiation of recovery proceedings - time limitation - Section 78 of Gujarat GST Act - HELD THAT - A perusal of the provisions of Section 78, would indicate that no recovery proceedings can be initiated against the assessee before the expiry of three months from the date of the service of the order - It is not in dispute that in the case on hand, within one month, the proceedings came to be initiated in the form of attachment of the factory premises - Having regard to the materials on record, one thing is for sure that no opportunity of personal hearing was given to the writ applicant by the concerned authority before passing the impugned order. Although a specific request in this regard was made, yet, the impugned order came to be passed without affording any opportunity of hearing. Section 75(4), referred to above, makes it abundantly clear that an opportunity of hearing has to be given, more particularly, in those cases where a request is received in writing from the person chargeable with tax or penalty and without any adverse decision is contemplated against such person. One opportunity to be provided to the writ applicant to appear before the respondent No.2 and make good his case - entire matter is remitted to the respondent No.2 for fresh consideration - application allowed by way of remand.

Summary

Issues Involved:
1. Validity of the order dated 21.10.2020 issued by Respondent No.2.
2. Violation of principles of natural justice due to lack of personal hearing.
3. Legality of the recovery notice dated 17.12.2020 and attachment of the factory premises.
4. Non-compliance with Section 75(4) and Section 78 of the CGST Act, 2017.

Detailed Analysis:

1. Validity of the order dated 21.10.2020 issued by Respondent No.2:
The writ applicant, a public limited company, challenged the order dated 21.10.2020, which fixed the liability to pay service tax along with penalties. The operative part of the order stated that any lease or license to occupy land is a supply of service under the SGST and CGST Acts of 2017, and the real estate services provided by the assessee were liable to tax at 9% SGST and 9% CGST. The applicant received consideration of ?7,12,12,150/-, and the taxable value of supply of services was calculated accordingly, including interest and penalties.

2. Violation of principles of natural justice due to lack of personal hearing:
The primary issue raised by the writ applicant was that no opportunity for a personal hearing was provided before the impugned order was passed, which is a violation of the principles of natural justice. Although the respondent claimed that ample opportunities were given, the court found that there was no clear evidence of a specific notice for a personal hearing. Section 75(4) of the CGST Act mandates an opportunity for a hearing where a request is made in writing by the person chargeable with tax or penalty.

3. Legality of the recovery notice dated 17.12.2020 and attachment of the factory premises:
The writ applicant also challenged the recovery notice dated 17.12.2020, which included the attachment of the factory premises under Section 79 of the CGST Act, 2017. The court noted that no recovery proceedings could be initiated before the expiry of three months from the date of service of the order, as per Section 78 of the Act. In this case, the attachment was initiated within one month, violating the statutory provision.

4. Non-compliance with Section 75(4) and Section 78 of the CGST Act, 2017:
The court emphasized the importance of compliance with statutory provisions, particularly Sections 75(4) and 78 of the CGST Act. Section 75(4) requires granting an opportunity for a hearing, and Section 78 stipulates a three-month period before initiating recovery proceedings. The court found that these provisions were not adhered to, justifying the quashing of the impugned orders.

Conclusion:
The court allowed the writ application, quashing the impugned order dated 21.10.2020 and the recovery notice dated 17.12.2020. The matter was remitted to Respondent No.2 for fresh consideration, with instructions to issue a notice for a hearing and to pass a final order in accordance with the law. The court clarified that it had not addressed the merits of the case but focused on the procedural lapse regarding the opportunity for a hearing. The writ application was disposed of accordingly.