In a recent landmark ruling aimed at providing relief to taxpayers, a division bench of the Bombay High Court has deemed a GST order passed by tax authorities as “patently illegal.” The court’s decision came in response to an order that granted only seven days to file a reply to a show-cause notice, a move that the court found to be in direct violation of the basic provisions of the Goods and Services Tax (GST) law.
The High Court not only declared the order as erroneous but also directed the tax authorities to donate Rs10,000 to the PM CARES Fund. The court highlighted that the show-cause notice provided only seven days to respond, and the order was passed on the eighth day. Consequently, the court reasoned that the taxpayer could not be held liable for not paying the tax along with interest within 30 days of the notice’s issuance.
The bench, comprising Justice KR Shriram and Justice AS Doctor, went on to criticize the actions of the tax authorities, stating that such orders, which are contrary to the law and lack proper application of mind, are unnecessarily burdening the court’s docket. The court emphasized that these actions are causing undue hardship to the general public and wasting valuable judicial time.
Furthermore, the court cited Section 73(8) of the Maharashtra GST (MGST) Act, which stipulates a 30-day time limit from the issuance of a show-cause notice to file a reply if the taxpayer chooses not to make payment. The court clarified that this statutory period cannot be arbitrarily reduced to seven days by the assessing officer.
In a bid to address these issues, the court directed that a copy of its order be forwarded to the Central Board of Indirect Taxes & Customs (CBIC) and the Chief Commissioner of State Tax in Maharashtra. The aim is to encourage these authorities to conduct training or orientation sessions to educate their officers on the prevailing laws and rules, as well as to explain the concept of “principles of natural justice.”
This ruling by the Bombay High Court underscores the importance of adhering to legal procedures and principles of natural justice in tax matters. It also serves as a reminder to tax authorities to exercise due diligence and ensure that their actions are in line with the law, thereby preventing unnecessary litigation and hardship for taxpayers.