2024 (4) TMI 1058 - HC - GST

Violation of principles of natural justice - Ex-parte order - non-appearance of petitioner on account of compelling grounds - quantification of liability under the Uttar Pradesh Goods and Service Tax Act 2017 u/s 130 of the Act - intention of evade GST - improper accounting of goods - HELD THAT - Upon a perusal of the judgement in M/S MAA MAHAMAYA ALLOYS PVT. LTD. VERSUS STATE OF U.P. AND 3 OTHERS 2023 (3) TMI 1358 - ALLAHABAD HIGH COURT it is clear that the quantification of tax liability cannot be done under Section 130 of the Act rather the authorities should take recourse to Section 74 of the Act. Furthermore it appears from the record that the order impugned was passed ex parte. However it appears that several opportunities were given to the petitioner but the petitioner did not appear before the authorities. Counsel appearing on behalf of the petitioner submits that there were compelling grounds for non-appearance of the petitioner before the appellate authority. The impugned order dated December 7 2023 is quashed and set aside with a direction upon the authority below to grant opportunity of hearing to the petitioner and thereafter pass a reasoned order - petition disposed off.

Summary

Issues involved:
The quantification of liability under the Uttar Pradesh Goods and Service Tax Act, 2017 u/s 130 was challenged as impermissible in law. The order impugned was passed ex parte, raising concerns about the petitioner's non-appearance before the authorities despite opportunities given.

Judgment Details:

Issue 1 - Quantification of Tax Liability under Section 130 of the Act:
The petitioner challenged the quantification of liability under Section 130 of the Act, arguing it should be done u/s 74 instead. Referring to a previous judgment, it was emphasized that the tax demand can only be quantified as per Section 73 or Section 74 of the Act. The Court held that the exercise under Section 130 for tax assessment and penalty determination was not stipulated under the Act, rendering the impugned order unsustainable. It was noted that the liability to pay tax arises at the point of supply, and the contravention of provisions should be coupled with an intent to evade payment for penalty under Clause (iv) of sub-section (1) of Section 130.

Issue 2 - Ex Parte Order and Non-Appearance of Petitioner:
Although the order was passed ex parte, the petitioner did not appear before the authorities despite multiple opportunities. The petitioner's counsel argued compelling grounds for non-appearance. The Court acknowledged the petitioner's contentions but emphasized the importance of granting a hearing before passing a reasoned order. Consequently, the impugned order dated December 7, 2023, was quashed and set aside, with a direction for the authority to provide an opportunity of hearing to the petitioner.

In conclusion, the writ petition was disposed of with the direction to set aside the impugned order and ensure a fair hearing for the petitioner before passing a reasoned decision.