The Tripura High Court ruled that the Order demanding Unpaid GST for different tax periods by issuing Show Cause Notice only for 1 year is invalid.
The Petitioner, OPC Assets Solutions Pvt. Ltd. is a company registered under the Companies Act and is engaged in the business of providing goods on a rental basis to its customers across the country including in the State of Tripura.
The Superintendent issued a show-cause notice to the petitioner for recovery of unpaid tax and penalty for the financial year 2018-19. Along with this the Superintendent also attached an inquiry report essentially conveying that the petitioner had wrongly availed input tax credit in relation to the transactions with RRL by willful misstatement and suppression of facts. The petitioner replied to the show-cause notices resisting the demands and contending that the input tax credit was correctly availed. The Superintendent of Taxes issued the order of cancellation of registration of the petitioner and also issued separate orders confirming the tax and penalty demands against the petitioner for the tax periods 2017-18 till 2020-21.
Advocate B.L. Narsimhan appearing for the petitioner submitted that show-cause notice was issued only for one year whereas the Superintendent of Taxes passed five separate orders for different tax periods which was wholly impermissible. He further submitted that the entire order is passed without following the principles of natural justice. The Superintendent has relied on materials, documents and judgments never discussed with the petitioner. He drew our attention to a rather detailed order passed by the Superintendent of Taxes in which according to the counsel the discussion on merits of the issues was almost non-existent.
On the other hand, Government Advocate Mr. Debalay Bhattacharjee painstakingly took us through the detailed order passed by the Superintendent of Taxes and contended that this order is sound on merits. It is in any case an appealable order. The petitioner has approached the Court without availing of such appeal. Even on merit, no interference is necessary.
The division bench of Justice S.G. Chattopadhyay and Justice Akil Kureshi said, “in the age of internet and availability of information through technology, the Superintendent of Taxes was not precluded from doing his own homework and finding out material which was useful for the purpose of the case that he was deciding. However, any use of such material must precede sharing of it with the person likely to be adversely affected by his order. The basic requirement of the principle of natural justice for sharing adverse material before utilizing the same against a person must be observed with greater rigour in the times of availability of information on the internet, all of which need not necessarily be accurate at all times. Accurate or otherwise the notice must have a chance to meet with such adverse material before it is used against him. For each individual reason, namely, the order being unintelligible, the action failing the test of principles of natural justice, and the Superintendent of Taxes exceeding the show-cause notice, the impugned orders must be set aside. For sheer verbosity, the orders must go.”
However, the court said that nothing stated in this order would prevent the Superintendent of Taxes from proceeding against the petitioner afresh for framing proper assessment if so advised and permitted under law.
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