No response to Demand Notice issued under CGST Act due to ill-health of Proprietor: Calcutta HC directs to Conduct Fresh Adjudication [Read Order]

The Calcutta High court in a recent case, directed the GST department to Conduct fresh Adjudication as it was found that the assessee failed to response to Demand Notice issued under Central Goods and Service Tax ( CGST ) Act, 2017 due to ill health of proprietor.

 Swadhin Bose, the writ petitioner is directed against the order the appellant filed the writ petition challenging the order in original by which the adjudicating authority held that the appellant is liable to pay service tax and cess amounting to Rs.1,60,03,167/- apart from imposing penalty of Rs.10,000/-.

The fact of the case is that the adjudicating authority recorded a wrong finding of fact with regard to the nature of business activity carried on by the appellant for which registration has been obtained by the appellant inasmuch as in the order in original in paragraph 5.3.2 the adjudicating authority states that the appellant is registered with the service tax department for providing interior decoration/designing and works contract service.

It was pointed out that in the show cause notice dated 31st December, 2020 the department admits the fact that the appellant has registered himself as advertising agency service. It was submitted that the adjudication order suffers from perversity and is unreasonable. Further, challenged that it has been passed in violation of the principles of natural justice.

It was submitted that due to ill-health and the proprietor having been hospitalized could not give proper instructions to the authorized representative who also did not appear on the date fixed for hearing.

 Mr. Bhaskar Prosad Banerjee, counsel appeared for the respondents submitted that the appellant ought to have filed a statutory appeal before the appellate authority in terms of Section 85 of the Finance Act, 1994 as amended and having exhausted the appellate remedy the Single Bench was right in refusing to entertain the writ petition.

The division bench of Chief Justice T S Sivagnanam and Justice Bivas Pattanayak viewed that though the department had received the reply dated 12.02.2021 to the show cause notice dated 31st December, 2020, the adjudicating authority has recorded a wrong finding of fact stating that the appellant/assessee has not filed its reply.

It was evident that the appellant is a proprietorship concern and records having produced to show that the proprietor suffered serious health issues and was hospitalized.

Therefore, the adjudicating authority could have granted one more opportunity to the appellant to appear for a personal hearing. This having not been done, would also amount to the violation of the principles of natural justice.

The high court remanded the matter to the adjudicating authority for fresh consideration after affording an opportunity of personal hearing to the authorized representative of the appellant.

To Read the full text of the Order CLICK HERE

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