Order Date – 15 December 2022

Parties: M/S Manjeet Cotton Pvt. Ltd.  Vs Commissioner of State Tax

Facts –

• The Petitioner M/s Manjeet Cotton Pvt. Ltd. is engaged in the business of trading of Cotton Bales, Cotton Yarn, Cotton Seed Oil Cake, etc.
• A show cause notice was issued on 13.01.2022 alleging that the petitioner was supplied nil rated or exempted supply, but he had not reversed the ITC related to the said exempt supply as per Section 17(2) of the CGST Act read with Rule 42 of the Central Goods and Service Tax Rules,2017
• The petitioner submitted a reply on 26.01.2022 in Form GST DRC-06 wherein he requested to grant the adjournment of 30 days to submit a detailed reply in response to the show cause notice.
• The adjournment was granted by the respondent of 15 days and asked the petitioner to reply on or before 11.02.2022. The petitioner could not file the reply in response to the said show cause notice and also did not appeared for the personal hearing.
• The petitioner reversed the ITC along with the interest pertaining to the year 2017-18 to 2020-21. A notice under Section 79(1)(c) of the CGST Act, was also issued to the Manager of the Bank was asked to pay the amount of Rs.13,74,981/- on behalf of the petitioner. He freezed the debit transactions from the Bank account.

Issue –

• Whether the respondent action is in violation of principal of natural justice?

Order –

• The Hon’ble High Court observed that the online portal is indicative of the fact that adjournment was for both SCN reply and the personal hearing, however, on 11.02.2022 admittedly, neither the response was given in writing nor had the petitioner appeared in person.
• It was held that the officer concerned cannot be held responsible for not giving opportunity to be heard as the petitioner was aware of the fact only in the month of June. Also the petitioner was given 15 days of adjournment to file the reply.
• Be that as it may, for present, the petitioner is desirous of going to the Appellate Authority for questioning and challenging the assessment which has been finalized and that being his right, if he has missed out on the limitation, condoning this period of limitation in the given circumstance, keeping the larger issue open, this petition is allowed.
• As the amount is already credited from the Bank account of the petitioner, he would be entitled to seek re-credit, barring the amount of pre-deposit which shall be decided by the authority concerned including of the grant of further stay.
• There shall be no further coercive recovery and petitioner shall be entitled to operate the Bank account.