2023 (5) TMI 966 - HC - GST

Levy of Interest and penalty - respondent has not adverted to the petitioner's request with regard to extension of time in respect of three of the queries - Circular No.12/2022 dated 26.09.2022 - HELD THAT - It is crystal clear that reasonable opportunity ought to be given to a person to show cause and depending upon the facts of each case, even further extension of time can be granted by the Assessing / Adjudicating Officer. In any event, the decision to refuse or extend time ought to be exercised with sound reasons and not in an arbitrary or capricious manner. The circular dated 26.09.2022 of the respondent also clearly stipulates that the communication granting time or refusal to grant time, shall also be sent to the assessee. This Court finds that the impugned orders do not discuss the reasons for extension of time at all, leave alone giving its finding either granting or refusing the adjournment. In such circumstances, it is clear that there is a clear violation of the circular of the respondent themselves and it would be just and proper that the petitioner is afforded a fair opportunity to submit its explanation in respect of three pending queries within a reasonable time and thereupon, the respondent may pass fresh orders considering the entire explanation submitted by the petitioner, including the earlier explanations submitted by it. In such perspective of the matter, the impugned orders dated 10.02.2023 are set aside and the respondent is at liberty to fix a date for enquiry, giving a minimum of 30 days' time to enable the petitioner to submit its explanation with regard to the three pending queries or any further explanation that may be required by the respondent and thereupon, pass final orders, on merits, after affording personal hearing to the petitioner - Petition allowed.

Summary

Issues involved:
The legality and validity of the orders passed by the respondent under Section 73 of the Central Goods and Services Tax Act, 2017 for the financial years 2019-2020 and 2018-2019.

Summary:
The petitioner, a company engaged in the business of manufacturing lead acid storage batteries and registered under the Goods and Services Tax Act, challenged the orders passed by the respondent. The petitioner contended that it was not given sufficient time to respond to the show cause notice as required by Circular No.12/2022 issued by the respondent. The Court noted that the impugned orders did not address the petitioner's request for an extension of time, which was a violation of the circular. Therefore, the Court set aside the orders and directed the respondent to provide a minimum of 30 days for the petitioner to submit its explanation on the pending queries before passing final orders.

This judgment highlights the importance of granting a reasonable opportunity to the concerned party to respond to show cause notices and the need for authorities to provide sound reasons for granting or refusing extensions of time. The Court emphasized that decisions must not be made in an arbitrary manner and that communication regarding the granting or refusal of time should be sent to the assessee. The ruling serves to ensure procedural fairness and adherence to established guidelines in tax matters.