The Hon’ble High Court of Andhra Pradesh vide its order dated 29^th September 2022 in the matter of M/s M.R. Metals Vs. The Deputy Commissioner (ST) (INT) & Others in Writ Petition No. 31148 of 2022, set aside the assessment order passed without providing the material which form part of such order, finding that the assessing authority ought to have provided the said material enabling the petitioner to make a representation or produce any material against to the same, to substantiate its plea.  Further non-furnishing of the same would amount to violation of principles of natural justice.

The petitioner filed the writ petition before the Hon’ble High Court seeking declaration that the action of the 2^nd Respondent in provisionally attaching the petitioner’s properties through the impugned proceedings in Form GST DRC 22 dated 07.05.2022 as illegal, arbitrary, high handed, without authority of law and jurisdiction and contrary to the provisions of the Act.  Further declaration was also sought that the impugned order passed by the 1^st  respondent in Form DRC-07 dated 20.06.2022 as illegal, arbitrary, high handed, without authority of law and jurisdiction, contrary to the provisions of the CGST/SGST Act, 2017 and in violation of principles of natural justice and set aside the same.

Facts of the Case: –

• That the petitioner has been regularly filing returns and paying resultant tax in terms of Section 16 of the Central Goods and Services Tax Act, 2017/the State Goods and Services Tax Act, 2017.
• That an inspection was conducted in the premises of the petitioner, and pursuant to the inspection, a notice in GST DRC-01A dated 31.01.2022 was issued to the petitioner by Respondent No. 1, ascertaining an amount of Rs. 11,15,41,133/- towards the tax payable by the petitioner.
• The Petitioner duly filed detailed objections to same requesting to drop the proposed action.
• However, instead of considering the objections and the documentary evidence filed by the petitioner, Respondent no.1 issued notice in GST DRC -01 dated 07.04.2022 demanding an amount of Rs.22,58,49,854/-, along with imposition of 100% penalty and interest under Section 50 of CGST/SGST Act.
• Thereafter, again an explanation was submitted by the petitioner to the said notice along with material. However, a revised notice in GST DRC – 01 dated 30.05.2022 was issued by Respondent No.1 demanding Rs.28,00,20,392/-.
• That in response to the notice in GST DRC – 01 dated 30.05.2022, the petitioner filed a letter dated 10.06.2022 seeking 15 days’ time to file objections explaining the circumstances and got the same acknowledged from Respondent No.1. There was no response from Respondent No.1 either rejecting or restricting the time sought for by the petitioner.  However, the authority proceeded to pass the impugned order in Form GST DRC – 07 dated 20.06.2022, stating that the petitioner did not respond to the revised notice issued in GST DRC -01 dated 30.05.2022.
• Thereafter, in pursuance of the said order dated 20.06.2022, Respondent No.2 provisionally attached the bank account of the petitioner under Section 83 of the A.P.GST Act vide order, dated 07.05.2022. Being aggrieved of the actions of the Respondents the present writ petition has been moved by the petitioner.

It was submitted on the behalf of the petitioner that the order of assessment is bad in law as the material relied upon by the assessing authority was not furnished to the petitioner, which disabled him from giving appropriate reply to the show cause notice.  Further the provisional attachment order issued under Section 83 of the APGST Act is also bad in law for the reason that the Joint Commissioner has no power to issue the same coupled with the fact that the authority did not record his explanation before issuing the provisional attachment order.

On the other hand, it was submitted on the behalf of the respondents that that the argument advanced on the behalf of the petitioner that the Joint Commissioner could not have issued provisional attachment order under Section 83 of the APGST Act may not be correct.  Further with respect to the assessment order, it was submitted that the same was passed based on the material available with the assessing authority.  Thus, the Court cannot find fault with it.

Held: –

• The Hon’ble High Court after considering the submissions made and facts of the case, observed that a reading of order indicates that the said figures have been arrived at by respondent No.1, mainly on the ground that the petitioner failed to produce original tax invoices for the entire turnover but instead placed on record xerox copies of invoices for part of the turnover. Further it was further held that some of the dealers, from whom the petitioner has purchased the goods, are not existing/fictitious.  On Enquiring with toll gate authorities revealed that some of the vehicles did not pass through the said toll gates at Chittoor.
• Thereafter, the Hon’ble Court on perusal of the revised notice issued in GST DRC-01, dated 30.05.2022 found that the authority relied upon the material, which was not furnished to the petitioner. The assessment order does not mention of the dealers which have been held to be non-existing and fictitious by the authority.  Moreover, it does not mention of the toll gates through which the vehicles did not pass, according to the assessing authority, and also the name of the owners of the vehicles, who have not hired their vehicles to the petitioner are not furnished.  Since the material forms part of the impugned order, the Hon’ble Court was of the view that the assessing authority ought to have furnished the said material enabling the petitioner to make a representation or produce any material contra to the same, to substantiate his plea. Non-furnishing of the same, in our view, would be violation of principles of natural justice.

The Hon’ble Court with the above findings allowed the writ petition by setting aside the impugned order passed by Respondent No.1 in Form DRC-07 dated 20.06.2022 and remanded the matter back to the assessing authority.  It is made clear that the petitioner herein shall make an application within ten (10) days from the date of receipt of a copy of this order, requesting the authority to furnish documents which are relied upon by him in passing the impugned order.  The authority, on receipt of application, shall do the needful within a period of ten (10) days thereafter. Further, the assessing authority shall take into consideration the additional objections, if any, to be raised by the petitioner and pass order in accordance with law, after giving an opportunity of hearing to the petitioner.

Consequently, the provisional attachment order passed by respondent No.2 in Form GST DRC-22, dated 07.05.2022, is also set aside, giving liberty to the authority to issue fresh provisional attachment order, if required. Insofar as issuance of fresh provisional attachment order is concerned, the authority shall follow the procedure contemplated under Section 83 of the A.P.GST Act, 2017.