2020 (8) TMI 603 - HC - GST

High Court quashes liability assessment order due to health concerns, emphasizes due process

The High Court quashed the liability assessment order in Form GST DRC-01A issued by respondent No.4 due to the applicant's health concerns and lack of a ... Quashing and remittal for fresh consideration after hearing - opportunity of hearing before fixation of tax liability - provisional attachment to protect revenue interests pending fresh adjudication - validity of departmental assessment order issued in Form GST DRC-01A - provisional attachment order in Form GST DRC-22Quashing and remittal for fresh consideration after hearing - opportunity of hearing before fixation of tax liability - validity of departmental assessment order issued in Form GST DRC-01A - Order in Form GST DRC-01A dated 23rd July 2020 fixing tax liability quashed and remitted for fresh consideration after giving the writ applicant an opportunity of hearing. - HELD THAT: - The Court found that the writ applicant had not been afforded an opportunity to be heard before the departmental order in Form GST DRC-01A was passed fixing a substantial liability. The writ applicant had informed the authority of his inability to attend on medical grounds and had not been given a chance to make submissions that his transactions were legitimate. In these circumstances the Court held that the order could not stand and therefore quashed the Form GST DRC-01A dated 23rd July 2020 and directed the respondent to undertake de novo consideration after fixing a specific date for hearing, intimating the same in writing and permitting the writ applicant to appear and make submissions, following which a fresh order shall be passed in accordance with law. [Paras 6]Form GST DRC-01A dated 23rd July 2020 is quashed and the matter is remitted for fresh consideration after affording the writ applicant an opportunity of hearing.Provisional attachment to protect revenue interests pending fresh adjudication - provisional attachment order in Form GST DRC-22 - Provisional attachment of the writ applicant's properties ordered in Form GST DRC-22 dated 24th July 2020 is not set aside and shall remain in force pending fresh adjudication. - HELD THAT: - Although the departmental liability order was quashed and remitted, the Court declined to disturb the provisional attachment of the properties. The Court exercised its discretion to protect the revenue's interests during the interregnum so that no third party rights would be created before the respondent carried out the de novo adjudication. Consequently, the attachment was directed to continue until the respondent completes the fresh proceedings as ordered. [Paras 7]The provisional attachment in Form GST DRC-22 dated 24th July 2020 shall continue in force pending the fresh consideration by the respondent.Final Conclusion: The departmental order in Form GST DRC-01A dated 23rd July 2020 is quashed and the matter is remitted for de novo consideration after affording the writ applicant a hearing; the provisional attachment in Form GST DRC-22 dated 24th July 2020 is upheld and shall remain in force pending fresh adjudication. Issues:Challenge to Form DRC 1A and provisional attachment order in Form GST DRC-22 issued by respondent no. 4; Request for lifting attachment of properties, staying operation of Form GST DRC 01A, and avoiding coercive action against the petitioner; Seeking appropriate orders, directions, or reliefs from the Hon’ble Court; Dispute arising from respondent No.4's actions; Opportunity for hearing and fresh consideration of the matter; Decision on quashing Form GST DRC-01A and remitting the matter for reconsideration; Continuation of provisional attachment of properties for protecting government revenue.Analysis:The writ applicant, a businessman engaged in manufacturing, sought relief from a summons issued by respondent No.4 under GST Act, 2017, due to health reasons preventing his presence on the specified date. Subsequently, respondent No.4 assessed a liability of Rs. 1,07,05,725 against the applicant without providing an opportunity to defend his transactions. The High Court acknowledged the applicant's health concerns and the lack of a fair hearing, leading to the quashing of the order in Form GST DRC-01A. The matter was remitted to respondent No.4 for a fresh hearing, emphasizing the importance of due process and the right to be heard.Regarding the provisional attachment of the applicant's properties, the Court decided not to disturb the order despite quashing the liability assessment. This decision aimed to prevent third-party rights from arising during the reconsideration process. By maintaining the attachment temporarily, the Court balanced the interests of the government revenue with the applicant's right to a fair hearing. The judgment highlighted the need for procedural fairness and protection of legal rights in matters involving substantial liabilities and property attachments.In conclusion, the writ application was disposed of with the order to quash Form GST DRC-01A, provide the applicant with a hearing opportunity, and continue the provisional attachment for the interim period. The judgment exemplified the Court's commitment to ensuring justice, procedural regularity, and equitable treatment in tax-related disputes, emphasizing the significance of fair procedures and balanced outcomes in legal proceedings.