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Petitioner |
OPC Assets Solutions Pvt. Ltd. |
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Respondent |
State of Tripura & Others |
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Decision by |
Tripura High Court |
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Date of Order/Judgement |
31- August- 2021 |
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Citation No. |
W.P. No. : 399 of 2021 2021 (8) GSTPanacea 2 HC Tripura
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Hon’ble Judge |
Justice Akil Mureshi and Justice S.G. Chattopadhyay |
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Decision |
In Favour of Assessee |
Adverse Material-Adverse material never shared with petitioner before relying on them. Use of such material must be shared with person likely to be affect by it.
Adverse Material Without Noticee's Knowledge - Facts of the Case
Adverse Material-Petitioner is a company registered under the Companies Act and is engaged in the business of providing goods on rental basis to its customers across the country including in the State of Tripura.
For the purpose of its business the petitioner enters into a rental agreement with the customers and provides capital goods and machinery to such customers on lease.
In the State of Tripura the petitioner had provided such goods to M/s. Reliance Retail Limited, Tripura. The petitioner had taken premises on rent from one Rinku Dey under a lease agreement in the year 2018, however, subsequently the petitioner was compelled to obtain another premises on rent for its business purposes.
On 6.9.2020 the petitioner received a notice from the Superintendent of Taxes under Section 61 of the CGST Act pointing out certain discrepancies in the returns furnished by the petitioner. The petitioner made a detailed representation in response to the said notice under a communication dated 16.1.2021.
In the meantime, the Superintendent of Taxes had issued a notice on 6.12.2020 to the petitioner for cancellation of the registration.
On 10.3.2021 the Superintendent issued a show-cause notice to the petitioner for recovery of unpaid tax and penalty for 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.
On 23.4.2021 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.
These five orders are produced by the petitioner and which are under challenge before HC.
Argument Before the Court
Adverse Material Without Noticee's Knowledge - Petitioner’s Contention
Adverse Material-Petitioner challenged five summary demand orders passed by Superintendent of Taxes raising demand of tax and penalty for 2017-18 to 2020-21.
It is submitted that show-cause notice was issued only for one year, while five orders are passed for different periods.
It is further submitted that these orders have been passed relying upon adverse materials, documents and judgments which were never discussed with petitioner.
Petitioner submitted that the entire order is passed without following the principles of natural justice.
Adverse Material Without Noticee's Knowledge - Respondent’s Argument
Adverse Material-Learned 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.
Tripura High Court’s observation on the order
Adverse Material-He has discussed a law on Transfer of Property and the essentials of a lease. He has spoken on the remedies available with the lessor. He has also taken note of different kinds of leases. He has reproduced literature from books and presumably from internet. He has extensively reproduced from judgments of various Courts discussing constitutional principles. All these references are without showing relevance to the issues at hand.
The ultimate observations and conclusions in the order are hard to find and more difficult to understand. The task of the reader of this order to fish out the reasons in support of the demand is more difficult than finding a needle from a haystack. Howsoever hard we may try, it is difficult to separate the grain from the chaff.
Adverse Material Without Noticee's Knowledge - Tripura High Court Held
Adverse Material-The order passed by the Superintendent and the approach that he has adopted is totally unsatisfactory.
To begin with, the order reads more like a thesis in several fields of law in which he has tried to exhibit his half-baked, incomplete and internet acquired knowledge, in the process completely losing sight of the focal issue.
He has made his order needlessly verbose, in the process not deciding the vital issues at all.
More importantly he has referred to adverse materials, documents and judgments and there is no evidence that he ever shared the same with the petitioner before relying upon them, any use of such material must precede sharing of it with the person likely to be adversely affected by his order.
The noticee must have a chance to meet with such adverse material before it is used against him.
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.
Petition disposed of accordingly.