earlier notice without opportunity
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Case Title |
S.P.Y Agro Industries Limited vs Union of India. |
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Court |
Andhra Pradesh High Court |
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Honorable Judges |
Justice C.Praveen Kumar & Justice V.Sujatha |
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Citation |
2022 (5) GSTPanacea 356 HC Andhra Pradesh W.P.No. 256 of 2022 |
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Judgement Date |
05-May-2022 |
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Council for Petitioner |
M.V.Moorthy |
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Council for Respondent |
N.Harinath S.V.S.Prasada Rao |
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Section |
Section 62 and 161 of the Act |
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In Favour of |
In Favour of Assesses |
The Andhra Pradesh High Court bench of Justice C.Praveen Kumar & Justice V.Sujatha has held that authority can impose penalty on additional liability after giving reasonable opportunity of hearing such person. And any rectification, which adversely affects any person is possible only after following the principles of natural justice. Since the order impugned substantially affects the assessee as penalty is sought to be imposed, which demand did not form part of notice dated 13.08.2020, without giving an opportunity of hearing, the orders under challenge are set aside.
Facts of the Case
Respondent herein issued a letter dated 21.07.2020 in Form GSTR-3A under Section 46 of the CGST Act on the ground that the petitioner failed to submit its returns in GSTR-3B for the months of January, 2020 to June, 2020 and as such, the petitioner was directed to file fresh returns within 15 days
In view of the non-response on the part of the petitioner in furnishing returns, an assessment order came to be passed by the 3rd respondent on 13.08.2020 determining the liability at Rs.1,85,17,721/- towards IGST and Rs.1,39,39,656/- each towards CGST and APGST apart from a sum of Rs.3,36,798/- as cess payable by the petitioner for the tax period January, 2020 to June, 2020
The petitioner was also directed to pay amounts towards interest for belated submission of the returns. It is to be noted here that an order came to be passed in exercise of power conferred under Section 62 of the CGST Act, 2017, which provides a procedure for framing assessments on non filers of returns.
On 27.08.2020, thevery same authority, in exercise of its power under Rule 100(1) of CGST and SGST Rules, 2017 r/w Section 62(1) of the two GST Acts enlarged the order with certain additional liabilities by styling the said order as Corrigendum-cum-Addendum.
This Corrigendu cum-Addendum was directed to be inserted as para No.4.8 after para No.4.7 and consequently, directed the petitioner herein to pay penalty of Rs.18,51,772/- under IGST, Rs.13,93,966/- each under CGST and APGST Acts apart from cess.
Thereafter, the very same authority namely, the 3rd respondent herein issued another communication titling it as rectification order on 12.11.2020 under Section 161 of CGST Act in order to ratify the Corrigendum-cum-Addendum dated 27.08.2020, by which additions were inserted to the original order of assessment dated 13.08.2020. Since the rectification order dated 12.11.2020 being the latest one having imbibed the earlier two orders dated 13.08.2020 and 27.08.2020, was appealed in the prescribed form under Section 107 of the CGST Act.
It is stated that without looking into the rule position, the 2nd respondent passed the order dated 29.07.2021 confirming the proceedings of the 3rd respondent dated 12.11.2020. As there is no Tribunal functioning, the petitioner was forced to file this writ petition challenging these orders.
earlier notice without opportunity
Court Held
Considering the facts as recorded, held that penalties have been imposed creating additional liability on the petitioner, which was not reflected in the earlier notice dated 13.08.2020. No opportunity of hearing was given to the petitioner while imposing the said penalty
As stated earlier Section 62 of the Act does not anywhere speaks about imposing penalty. It only speaks about liability for payment of interest subsection (1) of Section 50 or for payment of late fee under Section 47 of the Act. Further, if the penalty is to be imposed in cases, which are not covered under Section 62 or Section 63 or Section 64 or Section 73 or Section 74 or Section 129 or Section 130, the authority can impose penalty after giving reasonable opportunity of hearing such person.
Further as observed earlier, under Section 161 of the Act any rectification, which adversely affects any person is possible only after following the principles of natural justice. Since the order impugned substantially affects the assessee as penalty is sought to be imposed, which demand did not form part of notice dated 13.08.2020, without giving an opportunity of hearing, the orders under challenge are set aside.
However, the respondents are permitted to proceed further by issuing a fresh notice and pass orders in accordance with law.
earlier notice without opportunity
Analysis of the Judgement
A very reading of 161 of the Act makes it very clear that where any rectification adversely affects any person, principles of natural justice shall be followed by the authority carrying out such rectification. 12.
Section 127 of the Act which has some importance deals with power to impose penalty in certain cases. It states that where the proper officer is of the view that a person is liable to a penalty and the same is not covered under any proceedings under Section 62 or Section 63 or Section 64 or Section 73 or Section 74 or Section 129 or Section 130, he may issue an order levying such penalty after giving reasonable opportunity of hearing such person.
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S.P.Y Agro Industries Limited
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Andhra Pradesh High Court