2021 (9) TMI 54 - HC - GST

Recovery of unpaid Central as well as GST and IGST from the petitioner with penalty - wrongful availment of input tax credit - cancellation of registration of petitioner - time limitation - HELD THAT - First and foremost the Superintendent of Taxes has passed five separate orders for different tax periods starting with 2017-18 to 2020-21 raising tax demands with penalty. We have noticed that he had issued show cause notice for assessment and penalty on 10.03.2021 only for the assessment period 2018-19. Without any further show-cause notice he could not have assessed the petitioner for remaining years and imposed penalties. His stand that once notice is issued for a particular tax period, no notice is necessary for other tax periods stems from utter ignorance of law. This fundamental breach is sufficient to vitiate the orders of assessment barring one for the period in relation to the year 2018-19. Even otherwise the impugned order cannot sustain. The Superintendent of Taxes has passed an order which runs into close to 150 pages in which he has discussed range of issues completely unconnected to the case on hand - The ultimate observations and conclusions in the order are hard to find and more difficult to understand. The task of the reader of this order to fish out the reasons in support of the demand is more difficult than finding a needle from a haystack. Howsoever hard we may try, it is difficult to separate the grain from the chaff. The order passed by the Superintendent and the approach that he has adopted is totally unsatisfactory. To begin with, the order reads more like a thesis in several fields of law in which he has tried to exhibit his halfbaked, incomplete and internet acquired knowledge, in the process completely losing sight of the focal issue. He has made his order needlessly verbose, in the process not deciding the vital issues at all. More importantly he has referred to materials, documents and judgments and there is no evidence that he ever shared the same with the petitioner before relying upon them - Accurate or otherwise the noticee must have a chance to meet with such adverse material before it is used against him. For each individual reason namely the order being unintelligible, the action failing the test of principles of natural justice and the Superintendent of Taxes exceeding the show-cause notice, the impugned orders must be set aside. For sheer verbosity the orders must go. Petition disposed off.

Summary

Issues:
Challenge to summary demand orders raising Central, GST, and IGST demands with penalties for tax periods 2017-18 to 2020-21. Allegations of impermissible multiple orders, lack of natural justice, and excessive verbosity in the Superintendent of Taxes' order.

Analysis:
The petitioner, a company providing goods on rental basis, challenged five summary demand orders issued by the Superintendent of Taxes for tax periods 2017-18 to 2020-21. The petitioner contended that the orders were impermissible as only one show-cause notice was issued for 2018-19, yet separate orders were passed for different tax periods. Additionally, the petitioner argued that the orders lacked principles of natural justice, as materials and judgments were relied upon without discussion with the petitioner, and the order was detailed but lacked substantive discussion on the merits of the issues raised.

The Government Advocate defended the Superintendent's orders, claiming they were sound on merit and appealable. However, the Court found significant flaws in the Superintendent's actions. Firstly, passing separate orders for different tax periods without additional show-cause notices was deemed a fundamental breach of law, except for the period related to 2018-19. The Court highlighted that the Superintendent's order was excessively verbose, delving into irrelevant legal concepts and principles, making it challenging to discern the reasons supporting the demands. The Superintendent's approach was criticized for lacking focus on the central issue, being unintelligible, and failing to adhere to the principles of natural justice by not sharing relevant materials with the petitioner before relying on them.

Consequently, the Court set aside the impugned orders due to the Superintendent's unsatisfactory approach, excessive verbosity, and failure to meet the requirements of natural justice. The orders were deemed unintelligible, lacking in substance, and exceeding the scope of the show-cause notice. The Court emphasized the importance of clarity, adherence to legal principles, and sharing adverse materials with the affected party. The Superintendent was allowed to proceed afresh against the petitioner if necessary, following proper assessment procedures and legal requirements. The petition was disposed of, and any pending applications were also resolved accordingly.