2022 (5) TMI 125 - HC - GST

Tax Demand Proceedings Set Aside Due to Improper Ocean Freight Inclusion and Denial of Personal Hearing Rights

The HC set aside DRC-07 proceedings against a private company for alleged turnover suppression spanning 2017-20. The proceedings improperly included ... Levy of IGST - Ocean Freight - constitutional validity of Notification Nos.10/2017-Integrated Tax (Rate), dated 28.06.2017 and 8/2017-Integrated Tax (Rate), dated 28.06.2017 respectively - HELD THAT:- Learned Government Pleader for Commercial Taxes would submit that the argument of the learned senior counsel that there was no personal hearing may not be correct as objections filed were taken into consideration at the time of passing of the order. The ocean freight alleged to have been paid is given credit and that no loss is caused to the petitioner. However, learned Senior Counsel for the petitioner would contend that in view of the notices issued there is every possibility of collecting ocean freight inspite of the order passed by this Court staying the same. The impugned proceedings in DRC-07 dated 10.02.2022 is set aside and the matter is remanded back to the first respondent, who shall deal with the same and pass appropriate orders after giving an opportunity of personal hearing to the petitioner, in accordance with law. The writ petition disposed off. Issues:Challenge to DRC-07 proceedings dated 10.2.2022 for the years 2017-18, 2018-19, and 2019-20 under Article 226 of the Constitution of India.Analysis:The petitioner, a Private Limited Company, challenged the DRC-07 proceedings initiated by the 2nd respondent, authorized by the 1st respondent, for alleged turnover suppression. The petitioner participated in inspections, provided necessary documents, and disputed the issues raised. Show-cause notices were issued, proposing significant tax liabilities under IGST, CGST, and SGST for the three years. The petitioner contested the notices, attended personal hearings, and raised objections, particularly regarding alleged non-payment of tax on ocean freight.The petitioner had previously challenged the levy of IGST on ocean freight in a separate writ petition, resulting in a court order directing authorities not to take coercive steps for recovery. Despite this, the DRC-07 proceedings dated 10.02.2022 included a demand for ocean freight payment, contradicting the previous court order. The petitioner's counsel argued that demanding payment despite the court order was improper and highlighted the lack of a personal hearing during the proceedings.The Government Pleader for Commercial Taxes defended the proceedings, stating that objections were considered, and the alleged paid ocean freight was credited, causing no loss to the petitioner. However, the petitioner's counsel raised concerns about the potential collection of ocean freight despite the court order staying the same. The court, after considering the arguments, set aside the DRC-07 proceedings and remanded the matter back to the first respondent for reevaluation, emphasizing the need for a proper personal hearing and compliance with the law.In conclusion, the court disposed of the writ petition with specific directions for the first respondent to reexamine the matter, ensuring a fair opportunity for the petitioner to present their case. No costs were awarded, and related pending petitions were closed accordingly.