2021 (8) TMI 403 - HC - GST

Petitioner wins challenge against tax rule violation, court emphasizes natural justice

The court quashed the impugned order dated 15.02.2020, allowing relief to the petitioner who challenged Section 16(4) of the Bihar/Central Goods and ... Ex-parte order - disallowance of Input Tax Credit and further imposing of tax - Validity of Section 16(4) of the Bihar/Central Goods and Services Tax Act, 2017 - imposition of time limit for the availment of Input Tax Credit being violative of Article 14, Article 19(1)(g) and Article 300A of the Constitution of India - validity of amendment carried under Rule 61(5) of the Bihar/Central Goods and Services Tax Rules, 2017 inserted vide Clause 4(a) of Notification No. 49/2019 dated 9th October, 2019 - disallowance of Input Tax Credit - HELD THAT:- This Court, notwithstanding the statutory remedy, is not precluded from interfering where, ex facie, we form an opinion that the order is bad in law. This is for two reasons- (a) violation of principles of natural justice, i.e. Fair opportunity of hearing. No sufficient time was afforded to the petitioner to represent his case and (b) order passed ex-parte in nature, does not assign any sufficient reasons even decipherable from the record, as to how the officer could determine the amount due and payable by the assessee. The order, ex parte in nature, passed in violation of the principles of natural justice, entails civil consequences. Matter restored back. Issues:1. Challenge to Section 16(4) of Bihar/Central Goods and Services Tax Act, 20172. Challenge to the amendment under Rule 61(5) of Bihar/Central Goods and Services Tax Rules, 20173. Quashing of order disallowing Input Tax Credit and imposing tax4. Restraining authorities from initiating recovery proceedings5. Violation of principles of natural justice in the order passedAnalysis:1. The petitioner challenged Section 16(4) of the Bihar/Central Goods and Services Tax Act, 2017, arguing it violated constitutional provisions and the basic structure of the Act. The court found that despite statutory remedies, it could intervene if the order was legally flawed. The court noted violations of natural justice principles, such as inadequate time for representation and lack of reasons in the order. Consequently, the court quashed the impugned order dated 15.02.2020, allowing the petitioner relief.2. The petitioner also contested the amendment under Rule 61(5) of the Bihar/Central Goods and Services Tax Rules, 2017, introduced through Notification No. 49/2019. The court found merit in the petitioner's argument that the retrospective effect of the amendment interfered with vested rights. However, the court disposed of the petition without expressing a final opinion on this issue, leaving it open for separate proceedings challenging the vires of the rule.3. The order disallowing Input Tax Credit and imposing tax was challenged by the petitioner. The court, considering the violations of natural justice and lack of reasons in the order, quashed the order dated 15.02.2020 and the subsequent order dated 07.03.2020. The court directed the petitioner to deposit a certain amount and cooperate with the Assessing Authority, ensuring a fair hearing and expeditious decision on merits.4. The petitioner sought to restrain authorities from initiating recovery proceedings based on the impugned order. The court, after quashing the order and directing fair proceedings, ensured that no coercive steps would be taken against the petitioner during the pendency of the case. This provided temporary relief to the petitioner.5. The court emphasized the importance of natural justice and fair procedures in its judgment. It highlighted the need for adequate opportunity for representation and reasoned orders. By setting aside the impugned order due to violations of these principles, the court upheld the petitioner's right to a fair hearing and legal recourse.