Case Title: Shaurya and Company v. Union of India
Court Name: High Court of Patna
Petition Number: Civil Writ Jurisdiction Case No. 18413 of 2021
Category of Dispute: Assessment Order – Principles of Natural Justice
Relevant Sections: Section 73, Section 107(6)(b), Section 107(11), Rule 142(5) of CGST Act/Rules
Date of Judgement: 22 December 2022
Facts of the Case
[Para 1] The petitioner challenged multiple orders dated 30-12-2020 and 18-08-2021 passed by the State Tax authorities under Section 73 and Rule 142(5) of the CGST Act, determining a tax, interest and penalty liability totaling ₹33,70,165.79 for the FY 2019-20. The appellate authority had modified the order slightly but sustained most of it.
[Para 2] The petitioner’s appeal was rejected as time-barred by the Additional Commissioner (Appeal), and the tax demand remained effective, albeit with a minor reduction in interest.
[Para 3] The petitioner prayed for (i) quashing of all assessment and appellate orders, (ii) refund of pre-deposit and excess IGST, (iii) permission to revise GSTR-3B, and (iv) stay on coercive recovery steps.
Questions in Consideration
[Paras 2–5]
- Whether the appellate and assessment orders were passed in violation of natural justice principles?
- Can the High Court interfere despite the existence of an alternate statutory remedy under GST?
- Whether the petitioner should be granted refund and allowed to amend GSTR-3B for correction of tax heads?
Observations of the Court
[Para 5]
- The Court noted violation of natural justice: the order was passed ex parte, without granting adequate opportunity to be heard.
- The assessment order lacked reasons and failed to deal with the facts and legal issues, even in absence of petitioner’s representation.
- Appellate order rejection on technical grounds of limitation further prejudiced the petitioner’s right to be heard.
- The revenue counsel did not object to remand and assured no coercive recovery during reassessment.
Judgement of the Court
[Paras 6–7]
- The High Court quashed both the assessment order dated 30-12-2020 and the appellate order dated 18-08-2021.
- The matter was remanded to the Assessing Officer for fresh adjudication with full compliance of natural justice.
- Petitioner directed to deposit 10% of the demand, if not already done, and further 10% within 4 weeks as a condition to be heard.
- Authorities directed to de-freeze bank accounts and refrain from coercive recovery during proceedings.
- Case to be decided within two months, with liberty to challenge final order preserved.
Between Fine Lines
The High Court held that ex parte GST orders passed without hearing and reasoned discussion violate natural justice. It ruled that even when statutory remedies exist, courts can intervene in such cases. The assessment and appellate orders were quashed and remanded with specific directions for a fresh, fair hearing. Petitioner was protected from coercive actions, and refund claims were to be reconsidered as part of the fresh proceedings.
Summary of Referred Cases
| Name | Citation | Summary | Verdict |
| None specifically cited | — | The judgement is based entirely on principles of natural justice and no external precedents are cited. | Not applicable |
Takeaway:
“Natural Justice Prevails Over Procedure – GST Demand Order Quashed”
