GSTAT Raipur Invalidates Mechanical Appellate Orders, Remands Cases for Fresh Adjudication Over Violation of Natural Justice
Introduction
In a significant judicial pronouncement underscoring the indispensability of natural justice in tax assessments, the Raipur Bench of the Goods and Services Tax Appellate Tribunal (GSTAT) has set aside concurrent orders passed by the lower GST authorities. The Tribunal allowed three connected appeals by way of remand, fundamentally because the first appellate authority issued mechanical, identical orders without evaluating the substantive grounds of appeal or the extensive judicial precedents cited by the assessee.
The consolidated ruling involves three related entities: Cheema Trading Company Vs Commissioner State GST, M/s Cheema Bricks & Traders, and M/s Cheema Local Carrier & Construction. The Tribunal's decision serves as a critical reminder to adjudicating and appellate authorities under the GST regime that passing a "speaking order" is not a mere procedural formality but a foundational requirement of the justice delivery system.
Factual Matrix of the Dispute
The genesis of the dispute traces back to search and seizure operations conducted under Section 67 of the Central Goods and Services Tax Act, 2017 and the Chhattisgarh Goods & Service Tax Act, 2017. These operations took place on the 10th and 11th of February 2021 at various business premises associated with the connected entities. During the search, the department seized multiple records, including site-wise registers, invoice books, and other business documents.
Based on the intelligence gathered and the documents recovered, the department initiated proceedings alleging tax evasion, invoking the extended period provisions under Section 74 of the GST Act. The department subsequently issued FORM GST DRC-01A in February 2023, which was later followed by the issuance of FORM GST DRC-01 (Show Cause Notice) on 13.04.2023.
Quantification of Demands
The adjudicating authority passed ex-parte Orders-in-Original on 23.06.2023, confirming substantial tax demands, along with equivalent penalties and applicable interest, against the three entities. As reported in the order, the specific demands were quantified as follows:
1. M/s Cheema Bricks & Traders (Appeal No. 05/RPR/2026)
The demand was primarily founded on the extrapolation of entries found in the seized site-wise registers.
- Tax: ₹47,27,620
- Interest: ₹16,31,028
- Penalty: ₹47,27,620
- Total Demand: ₹1,10,86,268
2. M/s Cheema Trading Company (Appeal No. 20/RPR/2026)
The demand was based on estimations derived from the seized invoice books and related material.
- Tax: ₹15,65,792
- Interest: ₹5,40,199
- Penalty: ₹15,65,792
- Total Demand: ₹36,71,783
3. M/s Cheema Local Carrier & Construction (Appeal No. 31/RPR/2026)
The demand was levied concerning alleged independent taxable transportation and Goods Transport Agency (GTA) activities.
- Tax: ₹9,42,668
- Interest: ₹3,25,220
- Penalty: ₹9,42,668
- Total Demand: ₹22,10,556
In all three instances, the tax liability was divided equally between the Central GST (CGST) and State GST (SGST) components, with no Integrated GST (IGST) or cess involved.