High Court quashes GST interest order for lack of natural justice, directs fair assessment review. Coercive actions halted.

The High Court quashed the summary order imposing interest under the GST Act due to lack of natural justice principles, directing the petitioner to deposit a percentage of the demand for further assessment. The rejection of the appeal without proper consideration led the court to order a fair review by the Assessing Authority. Coercive actions for demand recovery were halted during the case, with bank accounts to be immediately released. Emphasizing natural justice, the court outlined procedural fairness requirements and reserved rights for future legal actions.

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Issues:
1. Quashing of summary order imposing interest under GST Act
2. Rejection of appeal without application of mind
3. Coercive action for recovery of demand
4. Violation of principles of natural justice in ex parte orders

Analysis:
1. The petitioner sought relief for quashing a summary order issued under the GST Act, imposing interest on the gross amount without deducting Input Tax Credit. The High Court noted that the order was passed without issuing show cause notices, violating the principles of natural justice. The court found that the order was ex parte and lacked sufficient reasons to determine the amount due. Consequently, the court quashed the impugned orders and directed the petitioner to deposit twenty percent of the demand raised within four weeks, subject to further assessment by the Assessing Officer.

2. The appeal filed by the petitioner was rejected by the Additional Commissioner of State Taxes based on non-receipt of certified copies. The court observed that the rejection was without proper application of mind and in an ex parte manner. Despite the statutory remedy, the court intervened due to the violation of natural justice principles. The court directed the Assessing Authority to decide the case on merits after affording a fair opportunity to both parties and to pass a speaking order with reasons within a specified timeframe.

3. The petitioner also sought a direction to restrain the respondent from taking coercive action for recovery of the demand during the pendency of the case. The court accepted this request and directed that no coercive steps should be taken against the petitioner while the case is ongoing. Additionally, the court ordered the immediate de-freezing or de-attaching of the petitioner's bank account(s) if attached in relation to the proceedings.

4. The High Court emphasized the importance of adhering to natural justice principles and fair hearing procedures. It highlighted that orders passed in violation of these principles have civil consequences. The court, while disposing of the writ petition, set out detailed terms for further proceedings, including the petitioner's cooperation, expeditious decision-making, and the liberty to challenge the order if necessary. The court left all issues open for further examination and reserved the right for parties to seek other legal remedies available to them.

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