Ex Parte order demanding GST based on Difference in Turnover from Earlier GST DRC-01A: Calcutta HC directs to provide Opportunity [Read Order]

The Calcutta High Court quashed the ex parte order demanding Goods and Services Tax (GST) based on the difference in turnover from earlier GST DRC-01A and directed the department to provide opportunity of hearing.

The writ petitioner, Hotel Rudra & Anr has been filed challenging the order dated 28.09.2021 passed by the Joint Commissioner, State Tax, Baharampur Circle.The writ petitioner no.1 is a partnership firm carrying on business under the trade name of M/s. Hotel Rudra, and is duly registered with the GST Authority under the West Bengal Goods & Services Tax Act, 2017.

The issue involved in the instant case pertains to enhancement of taxable turnover from Rs.19,33,516/- (Rs.63,92,969-Rs.44,59,453) to Rs.70,03,871/- during the period from April, 2019 to February, 2020, segregating the enhanced turnover under several heads namely; Food of Rs.30,26,256/- Hukka of Rs.9,43,155/- and Banquet of Rs.8,34,460/- whereas the petitioners have only room rent service of Rs.19,33,516/- on which tax is payable.

The inspection, search and seizure for the period from 2017-18 to 2019-20 was initiated by the respondent no.1. During the pendency of such proceeding and intimation in Form GST DRC-01A vide Memo No.792/BI-SB dated 18.09.2020 were issued, wherein a difference in turnover in GST returns and the seized documents were pointed out. As a result of which, the turnover for the relevant period from April, 2019 to February, 2020 was determined at Rs.48,03,871/- and was subjected to tax @ 5%, 18% and 28% on the alleged supply of food, hukka and banquet service respectively.

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Subsequently, the respondent no.1 issued a show-cause notice on 07.10.2020 in Form GST DRC-01 wherein a turnover being different from the earlier GST DRC-01A was determined at Rs.70,03,871/- assessing the tax liability to the tune of Rs.6,75,599/- and the penalty of equal sum along with applicable interest. Consequent thereto a final order was passed vide 15.12.2020 assessing the total tax liability of Rs.4,92,597.36 with penalty of equal sum together with interest of Rs.1,71,081/- being the total demand of Rs.10,30,277/-.

The writ petitioners filed an appeal before the appellate authority being the respondent No. 2 herein, who disposed of the matter ex parte by an Order dated 28.09.2021 which is the subject matter of challenge. The petitioner submitted that the matter be remanded back to the concerned authority for proper adjudication since the matter was

disposed of ex parte.

Per contra, the Counsel for the respondents strenuously argued that the petitioners were already given ample

opportunities to appear before the authority concerned but they remained absent and also failed and or neglected to submit any kind of communication to the Department concerned for explaining the reasons for such nonappearance.

A single bench of Justice Smita Das De held that since the matter has been disposed of ex parte without considering the merits of the case, and for the sake of interest of justice and equity the matter should be remanded back to the authority concerned for proper adjudication of the same. The principles of natural justice warrants that a party should have a fair opportunity to present his or her case.

Hence, the respondent No. 2 is directed to fix a date of hearing peremptorily upon service of notice of hearing to the petitioner and pass a reasoned order after affording an opportunity of hearing within a period of 8 weeks. It is made clear that the petitioner shall appear on the date fixed for hearing failing which the matter shall be heard ex parte and no further adjournment shall be granted to the petitioner.

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