Patna HC quashes Order imposing interest on gross amount without deducting ITC due to Violation of Principle of Natural Justice [Read Order]

Patna High Court - Order - Imposing interest - Gross amount - ITC - Deducting ITC - Violation - Principle of natural justice - Taxscan

The Patna High Court has quashed Order imposing interest on gross amount without deducting ITC due to violation of principle of natural justice.

The Petitioner, M/s Manshi Automobiles Near Bihta Chourashta has prayed for the following relief(s) for consequential writ or order for quashing of summary of order issued in Form GST DRC 07 by the Assistant Commissioner, State Tax, Danapur Circle, Danapur, District Patna the Respondent no.5 under Section 75 of the GST Act whereby the interest has been imposed on gross amount without deducting the Input Tax Credit which is already paid by the petitioner and in utter violation of the principle of natural justice as the same was passed without issuance of show cause notice.

The Revenue has stated that he has no objection if the matter is remanded to the Assessing Authority for deciding the case afresh. Also, the case shall be decided on merits. Also, during pendency of the case, no coercive steps shall be taken against the petitioner.

The division bench of Chief Justice Sanjay Karol and Justice S. Kumar held that this Court, notwithstanding the statutory remedy, is not precluded from interfering where, ex facie, the court was of the opinion that the order is bad in law. 

“This we say so, for two reasons violation of principles of natural justice, i.e. Fair opportunity of hearing. No sufficient time was afforded to the petitioner to represent his case; order passed ex parte in nature, does not assign any sufficient reasons even decipherable from the record, as to how the officer could determine the amount due and payable by the assessee. The order, ex parte in nature, passed in violation of the principles of natural justice, entails civil consequences,” the court said.

M/S Manshi Automobiles Near Bihta Chourashta, NH- 30 vs The Union of India through the Secretary, Ministry of Finance, Government of India, New Delhi.


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