Natural justice in GST detention matters requires disclosure of third-party material before tax and penalty are imposed.

Detention of a consignment and imposition of tax and penalty under the Karnataka GST Act could not stand where the authorities relied on third-party material without giving the petitioner an effective chance to rebut it. Section 129(4) requires an opportunity of being heard before tax, interest, or penalty is determined under section 129(3), reflecting the rule that no person should be condemned unheard. Because the authorities acted on correspondence and data said to have been obtained from a security agency, fairness required disclosure and a meaningful opportunity to meet that material. The HC quashed the impugned orders and remitted the matter for fresh consideration after such opportunity.

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Issues: Whether the orders detaining the consignment and levying tax and penalty under the Karnataka Goods and Services Tax Act, 2017 could be sustained when the authorities relied on third-party data without giving the petitioner an effective opportunity to meet that material.

Analysis: The dispute turned on whether the consignment was moved without the prescribed e-way bills and whether the petitioner was denied a fair opportunity to controvert the material relied upon by the authorities. The authorities based their conclusion on correspondence and data said to have been obtained from a third-party security agency, while rejecting the petitioner's version that the e-way bills had been generated before interception. Section 129(4) of the Karnataka Goods and Services Tax Act, 2017 requires that no tax, interest, or penalty be determined under sub-section (3) without giving the person concerned an opportunity of being heard. That requirement embodies the rule against condemning a person unheard. If the authorities intended to rely on material obtained from a third party, fairness required that the petitioner be given an opportunity to meet that material before adverse consequences were imposed.

Conclusion: The impugned orders could not be sustained and were quashed, and the proceedings were remitted for fresh consideration after giving the petitioner an opportunity to meet the materials relied upon.

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