2021 (6) TMI 380 - HC - GST

Maintainability of petition - alternative efficacious remedy of filing an appeal - Validity of section 16(4) of the Central Goods And Services Tax Act 2017 - benefit of input tax credit - HELD THAT - This Court, notwithstanding the statutory remedy, is not precluded from interfering where, ex facie, we form an opinion that the order is bad in law. This we say so, for two reasons- (a) violation of principles of natural justice, i.e. Fair opportunity of hearing. No sufficient time was afforded to the petitioner to represent his case; (b) order passed ex-parte in nature, does not assign any sufficient reasons even decipherable from the record, as to how the officer could determine the amount due and payable by the assessee. The order, ex parte in nature, passed in violation of the principles of natural justice, entails civil consequences. Petition disposed off.

Summary

Issues involved:
Challenge to the validity of provisions under Central Goods and Services Tax Act 2017 and Bihar Goods and Services Tax Act 2017; Denial of input tax credit; Violation of principles of natural justice in passing ex parte order.

Analysis:

1. Challenge to the validity of provisions under Central and State GST Acts:
The petitioner sought a declaration that the provisions under Section 16(4) of both the Central and State Acts were ultra vires the Constitution. The argument was that these provisions imposed additional eligibility conditions for input tax credit beyond those prescribed under Section 16(2), violating the concept of indirect taxation. The Court considered the petitioner's contentions and ultimately disposed of the petition on grounds of violation of natural justice in the ex parte order, without delving into the constitutional validity of the provisions.

2. Denial of input tax credit:
The petitioner's claim for input tax credit was rejected due to delay in filing returns as per Section 16(4) of the Acts. The Court found that the order passed by the Assistant Commissioner of State Taxes was ex parte in nature and lacked sufficient reasons or opportunity for the petitioner to present their case. Consequently, the Court quashed the impugned order and directed the petitioner to deposit a percentage of the demanded amount for appeal proceedings.

3. Violation of principles of natural justice in passing ex parte order:
The Court highlighted the violation of principles of natural justice in the ex parte order dated 5th March 2020. It noted that the petitioner was not given a fair opportunity to be heard, and the order did not provide adequate reasons for determining the amount due. Emphasizing the civil consequences of such orders, the Court set aside the impugned order and directed a fresh hearing with proper opportunity for all concerned parties.

In conclusion, while addressing the issues raised by the petitioner regarding the validity of provisions under the GST Acts and the denial of input tax credit, the Court primarily focused on the procedural irregularities and violation of natural justice in the ex parte order. The judgment emphasized the importance of fair hearings and adequate reasoning in tax matters, ultimately leading to the disposal of the petition on grounds of procedural deficiencies.