Hon’ble Gujarat HC set aside the order passed u/s 74 of the CGST Act, for being passed without following the PNJ and during the Complete lockdown

When the whole of the India was in complete lockdown from 24th March’20 to 31st May’20 due to COVID-19, and the Government was extending assistances to the assessees all over India in forms of extending the time limits for filing returns, payment of tax or by issuing circulars and directing the authority for expeditious disposal and granting of refund. It was expected from the revenue authorities that before passing of the adverse order under provisions of GST, relaxation would be given to the assessees who are already suffering because of the COVID-19 and the complete lockdown as a consequence of the COVID-19.

However, in number of cases, leave alone the relaxation, even the due process of law was not carried out while passing the orders under the provisions of the CGST. In one of such cases, where the revenue authorities passed the impugned order dated 22.05.2020 under Section 74 of the CGST Act, without following the due process of assessment and adjudication under Section 73/74 of the CGST Act and without giving the hearing opportunity, the petitioner approached the Hon’ble High Court of Gujarat in the case titled Hasimkhan Liyakatkhan Pathan v. State of Gujarat R/Special Civil Application No.  7905 Of 2020, praying before the Court to set aside and quash the impugned order dated 25.02.2020 passed during the lockdown period, without following the due process of assessment and adjudication and for violative of principle of natural justice, and to restrain the respondent from taking any coercive action pending the writ petition.

The Hon’ble High Court without delving into the facts and merits of the cases, set aside the impugned order dated 22.05.2020 only on the ground that it has been passed during the lockdown without following the due process of law and without giving hearing opportunity. The Hon’ble Court remitted the matter to the respondents to pass an order in accordance with law after giving hearing opportunity to the petitioner.

Author’s Comment:

The insensitiveness of the revenue authorities towards assessees can be seen on a regular basis, where perverse orders are passed without following the principle of natural justice, refunds are rejected on trivial procedural gaps and without hearing out the assessees, but during the COVID-19 and the complete lockdown which followed the COVID-19, the assessees were hopeful that revenue authorities would provide some relaxation while dealing the matters, which could cost assessees their business. However, the same insensitiveness during the COVID-19 could be seen from the above elaborated case, where they didn’t consider it necessary to pass the order by following the due process of assessment and adjudication and also didn’t consider it necessary to give hearing opportunity to the petitioner, when it is mandated under the law to provide the same. The order passed by the Hon’ble High Court, would set the precedent before the revenue authorities that their arbitrary and illegal manner of passing orders cannot escape legal consequences and that they shall pass the orders by following the due process of law.

The order of the Hon’ble High Court can be accessed at: Order

Yuvraj is an advocate and has completed his B.A. LL.B(Hons) from RGNUL-Punjab. He is a practicing advocate and has been involved in matters pertaining to GST and other indirect taxes as well as Direct Tax. He is active in Writ Courts and has involvement in a few landmark judgments like Pitambra Books Pvt. Ltd. V. Union of India (W.P.C. No. 627 of 2020), and represented Sales Tax Bar Association (Delhi) to resolve GST issues and glitches.