2020 (10) TMI 435 - HC - GST

Recovery of unpaid GST - case of the department was that the petitioner was selling packaged marked rice with registered trademark which activity, after 22.09.2017 was subject to Central as well as State GST which the petitioner had not paid - HELD THAT - In the present case, the petitioner has raised number of disputed questions of facts about the nature of its activities and the manner in which the petitioner was selling rice after 22.09.2017. It is not possible for this Court, nor even necessary to examine these disputed questions of facts acting as a first appellate authority in a writ petition. For example, the petitioner, as noted, had contended that the segregation of the stock of rice in different qualities was for internal purpose and not for marking at the time of sale. When the raiding party had found stock of packaged rice carrying registered marks, the defence of the petitioner was that the same was old stock sold prior to 22.09.2017 but returned due to quality disputes which was still lying in the godown. We are not commenting on whether such defences are genuine or not. The order passed by the adjudicating authority takes to account the background of the case, refers to the case of the department in issuing of notice, records the stand of the petitioner in opposition, records in detail the contentions of the petitioner during personal hearing and thereafter records his own reasons for the conclusions. The order thus is a speaking order and cannot be criticized by suggesting that no reasons are recorded or that it is a non-speaking order - If its effect is such that a part of the order of the competent authority which has been tainted on account of this breach, is severable and insofar as his foundational findings are concerned, the same still be maintained, it may not be necessary to set aside the entire order only on this ground. We have made these remarks, particularly since the petitioner does not seem to have disputed the seizure of certain stock of rice bags, including the bags carrying registered trademarks. However, all these aspects must be gone into by the appellate authority and cannot be examined in a writ petition at the first instance. Petition dismissed.

Summary

Issues:
Challenge to order by Assistant Commissioner of CGST regarding non-payment of GST on sale of rice with registered trademark.

Analysis:
1. The petitioner, a company engaged in manufacturing and supplying rice, challenged an order by the Assistant Commissioner of CGST alleging evasion of GST on the sale of rice with registered trademark.

2. The department contended that the petitioner had not paid GST on the sale of rice with registered trademark post 22.09.2017, leading to a show-cause notice demanding payment of unpaid GST on seized rice stock and subsequent sales.

3. The petitioner argued that pre-22.09.2017, rice supply did not attract GST, and post that date, they were not engaged in selling rice with registered trademark, disputing the department's claims regarding the seized stock and marked rice bags.

4. The adjudicating authority found the petitioner liable for Central and State GST on sales of rice with registered trademark post 22.09.2017, confirming the tax demand with interest and penalty, offering a reduced penalty if the tax demand was accepted.

5. The High Court declined to entertain the petition due to the availability of an alternative statutory appeal against the order. It emphasized the need to exhaust appeal mechanisms before approaching the High Court directly, citing precedents and the appeal route through the GST Tribunal.

6. The High Court noted that the petitioner raised factual disputes about their activities post-22.09.2017, emphasizing that such disputed facts should be examined by the appellate authority, not the Court in a writ petition.

7. The order by the adjudicating authority was deemed detailed and speaking, addressing the department's case, petitioner's contentions, and providing reasons for the conclusions, making it non-critiquable for lack of reasoning.

8. The petitioner's plea regarding cross-examination of witnesses was considered, with the Court highlighting the necessity of allowing cross-examination in departmental proceedings. However, it stated that this issue should be examined by the appellate authority to determine its impact on the order.

9. The petition was dismissed, but the Court clarified that the appellate forum should entertain the appeal on merits if filed within two weeks, without considering any observations made in the dismissal order.

10. Any pending applications were also disposed of as per the Court's ruling.