M/S C.K. Infrastructures Ltd vs The Union Of India Through The ...
2021 Latest Caselaw 3396 Patna

          IN THE HIGH COURT OF JUDICATURE AT PATNA
                   Civil Writ Jurisdiction Case No.11399 of 2021
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M/s C.K. Infrastructures Ltd. An incorporated Company having its place of business at 501, F Block, 5th Floor, Terrace Gardenia Apartment, Ashiana Digha Road, Near Passport Office, Patna- 800025 through its authorised representative namely Anil Kumar male aged about 41 years Son of Ram Shay Prasad Srivastava, House number 09, Sikandarpur, Purba Champaran, Bihar- 845434.

... ... Petitioner/s

Versus

1. The Union of India through the Secretary Ministry of Finance, Government of India at New Delhi.

2. The Principal Chief Commissioner of Central GST and CX Central Revenue Building, Birchand Patel Path, Patna.

3. The State of Bihar Through the Principal Secretary cum Commissioner, Department of State Taxes, Government of Bihar, Patna.

4. The Superintendent, CGST and CX S.K. Puri Range, Chandpura Palace, Patna.

... ... Respondent/s ====================================================== Appearance :

For the Petitioner/s : Mr.Gautam Kumar Kejriwal, Advocate Mr. Rahul, Advocate For the Respondent/s : Mr.Dr. K. N. Singh ( ASG ) Mr. Pawan Kumar, AC to AG Mr. Vikash Kumar, SC 11 ====================================================== CORAM: HONOURABLE THE CHIEF JUSTICE and HONOURABLE MR. JUSTICE S. KUMAR ORAL JUDGMENT (Per: HONOURABLE THE CHIEF JUSTICE)

(The proceedings of the Court are being conducted by Hon'ble the Chief Justice/Hon'ble Judges through Video Conferencing from their residential offices/residences. Also the Advocates and the Staffs joined the Patna High Court CWJC No.11399 of 2021 dt.16-07-2021

proceedings through Video Conferencing from their residences/offices.)

Date : 16-07-2021

Petitioner has prayed for the following relief(s):

"a) For holding and a declaration that the provision of law incorporated under section 16(4) of the Central Goods And Services Tax Act, 2017 (hereinafter referred to as the central act for short) as well as Bihar Goods And Services Tax Act, 2017 (hereinafter referred to as the state act for short) is ultra vires under the provisions of Article 265 of the Constitution of India;

b) For issuance of a consequential writ in the nature of a declaration striking down the provision of law incorporated under section 16(4) of both the central and the state act;

c) For holding and a declaration that the entitlement to the benefit of input tax credit is subject to fulfillment of the conditions prescribed under section 16 (2) alone and it cannot be subjected to further riders of eligibility conditions in terms of section 16 (4) of both the said acts;

d) For further holding and a declaration that the provision of law prescribed under section 16 (4) of both the central and state act violates and defeats the very concept of indirect taxation which is the foundation of both the laws;

e) For further holding and a declaration that the Patna High Court CWJC No.11399 of 2021 dt.16-07-2021

provision of law prescribed under section 16 (4) of both the central and state act has a direct consequence of subjecting the taxable person under the said central and state act to direct taxation which in other words is a tax charged on the income of a person and as such is a complete departure from the very spirit, theme and object of both the laws legislated by the Parliament and the competent legislatures;

f) For further holding and a declaration that the provision of law incorporated under section 16 (4) of both the central and state act creates a situation of double taxation of one particular transaction which is impermissible in terms of the provisions of both the central and state act as double taxation has not been specifically prescribed anywhere under both the legislations;

g) For further holding and a declaration that in absence of any restriction upon filing of returns for any part of the preceding financial year even after the month of September of the following financial year under the provisions of both the central and state act the denial of input tax credit in terms of section 16 (4) of both the acts is ultra vires the meaning and purpose arising out of conjoined reading of section 39 read with section 47 read with section 49 (2) of the central act;

Or In the Alternative

h) For holding and a declaration that the provision of law incorporated under section 16 Patna High Court CWJC No.11399 of 2021 dt.16-07-2021

(4) of both the central and state act is simply directory and not mandatory and as such any inadvertent failure or non-compliance of the requirements of the said provision would not defeat the entitlement of a person to input tax credit contemplated under the acts;

i) For holding and a declaration that the input tax credit being a substantial right arising out of beneficial part of legislation under both the central and state act cannot be snatched for the sake of mere procedures as prescribed under section 16 (4) of both the acts;

j) For holding and a declaration that the very nature of input tax credit as substantive right cannot permit its extinction at the hands of procedural requirements which is always directory in nature and not mandatory;

k) For issuance of a consequential writ or order for quashing of the letter of demand bearing reference no. V(30)256/ITC Blocking/2019- 20/212 dated 29.02.2020 and also for quashing of email dt. 22.04.2020 whereby and where under the input tax credit of Rs. 71,08,745/- claimed by the petitioner qua the financial year 2018-2019 has been held to be in teeth of section 16 (4) of the Central Act and consequential action in the shape of blockage of equivalent amount in the credit ledger of the petitioner coupled with a direction to the petitioner to reverse such amount and has also proposed imposition of liability of interest and penalty U/s 50 and 122(2) of the Central Act; Patna High Court CWJC No.11399 of 2021 dt.16-07-2021

l) For further issuance of a direction upon the respondent no. 4 to delete and remove the blockage instructions from the credit ledger of the petitioner in so far as the demand of reversal of input tax credit is concerned;

m) For further issuance of a direction or order restraining the respondent number 4 from taking any coercive action for recovery of the amount in demand from the petitioner during the pendency of the present writ application or for a direction for refund of the part or whole of the amount in case recovered from the petitioner in exercise of powers under the provisions of both the central and Bihar act during the the pendency of the writ application;

n) For grant of any other relief or reliefs to which the petitioner is found entitled in the facts and circumstances of this case."

It is brought to our notice that vide impugned letter

of demand bearing Reference No.V(30)256/ITC Blocking/2019-

20/212 dated 29.02.2020 and email dt. 22.04.2020, the input tax

credit of Rs. 71,08,745/- claimed by the petitioner qua the financial

year 2018-2019 has been held to be in teeth of section 16 (4) of the

Central Act and consequential action in the shape of blockage of

equivalent amount in the credit ledger of the petitioner coupled

with a direction to the petitioner to reverse such amount as also

imposition of liability of interest and penalty U/s 50 and 122(2) of Patna High Court CWJC No.11399 of 2021 dt.16-07-2021

the Central Act has been proposed.

Learned counsel for the Revenue, states that he has

no objection if the matter is remanded to the Assessing Authority

for deciding the case afresh. Also, the case shall be decided on

merits. Also, during pendency of the case, no coercive steps shall

be taken against the petitioner.

Statement accepted and taken on record.

However, having heard learned counsel for the parties

as also perused the record made available, we are of the

considered view that this Court, notwithstanding the statutory

remedy, is not precluded from interfering where, ex facie, we

form an opinion that the order is bad in law. This we say so,

for two reasons- (a) violation of principles of natural justice,

i.e. Fair opportunity of hearing. No sufficient time was

afforded to the petitioner to represent his case; (b) order

passed ex parte in nature, does not assign any sufficient

reasons even decipherable from the record, as to how the

officer could determine the amount due and payable by the

assessee. The order, ex parte in nature, passed in violation of

the principles of natural justice, entails civil consequences. As

such, on this short ground alone, we dispose of the present

writ petition in the following mutually agreeable terms: Patna High Court CWJC No.11399 of 2021 dt.16-07-2021

(a) We quash and set aside the impugned letter of

demand bearing Reference No.V(30)256/ITC Blocking/2019-

20/212 dated 29.02.2020 and email dt. 22.04.2020;

(b) We accept the statement of the petitioner that ten

per cent of the total amount, being condition prerequisite for

hearing of the appeal, already stands deposited. If that were

so, well and good. However, if the amount is not deposited for

whatever reason(s), same shall be done before the next date;

(c) Further the petitioner undertakes to additionally

deposit ten per cent of the amount of the demand raised

before the Assessing Officer. This shall be done within

four weeks.

(d) This deposit shall be without prejudice to the

respective rights and contention of the parties and subject

to the order passed by the Assessing Officer. However, if it

is ultimately found that the petitioner's deposit is in

excess, the same shall be refunded within two months from

the date of passing of the order;

(e) We also direct for de-freezing/de-attaching of the

bank account(s) of the writ-petitioner, if attached in reference

to the proceedings, subject matter of present petition. This

shall be done immediately.

Patna High Court CWJC No.11399 of 2021 dt.16-07-2021

(f) Petitioner undertakes to appear before the

Assessing Authority on 16th of September, 2021 at 10:30

A.M., if possible through digital mode;

(g) The Assessing Authority shall decide the case

on merits after complying with the principles of natural

justice;

(h) Opportunity of hearing shall be afforded to the

parties to place on record all essential documents and

materials, if so required and desired;

(i) During pendency of the case, no coercive steps

shall be taken against the petitioner.

(j) The Assessing Authority shall pass a fresh order

only after affording adequate opportunity to all concerned,

including the writ petitioner;

(k) Petitioner through learned counsel undertakes

to fully cooperate in such proceedings and not take

unnecessary adjournment;

(l) The Assessing Authority shall decide the case

on merits expeditiously, preferably within a period of two

months from the date of appearance of the petitioner;

(m) The Assessing Authority shall pass a speaking

order assigning reasons, copy whereof shall be supplied to Patna High Court CWJC No.11399 of 2021 dt.16-07-2021

the parties;

(n) Liberty reserved to the petitioner to challenge

the vires of Section 16(4) of GST Act and Rule 61(5) of

the GST Rules by way of separate proceedings.

(o) Liberty reserved to the petitioner to challenge

the order, if required and desired;

(p) Equally, liberty reserved to the parties to take

recourse to such other remedies as are otherwise available

in accordance with law;

(q) We are hopeful that as and when petitioner

takes recourse to such remedies, before the appropriate

forum, the same shall be dealt with, in accordance with

law, with a reasonable dispatch;

(r) We have not expressed any opinion on merits

and all issues are left open;

(s) If possible, proceedings during the time of

current Pandemic [Covid-19] be conducted through digital

mode;

The instant petition sands disposed of in the

aforesaid terms.

Interlocutory Application(s), if any, also stands

disposed of.

Patna High Court CWJC No.11399 of 2021 dt.16-07-2021

Learned counsel for the respondents undertakes to

communicate the order to the appropriate authority through

electronic mode.

(Sanjay Karol, CJ)

( S. Kumar, J)

K.C.Jha/-

AFR/NAFR
CAV DATE
Uploading Date          23.07.2021
Transmission Date