2021 (12) TMI 168 - HC - GST

Order Quashed for Violating Natural Justice, New Show Cause Notice Required

MESSRS TANAY CREATION THROUGH PROP. TANAY MAHAVIR SHAH Versus STATE OF GUJARAT

The court quashed the order dated 15.09.2021 for violating natural justice principles, directing a proper show cause notice under Section 130 of the CGST ... Violation of the principles of natural justice - Release of detained goods - bill & E-way bill was mismatched - Imposition of redemption fine - without serving a copy of the order and without even granting an opportunity of hearing, the stay order is passed - violation of the provisions of section 130 of the Central Goods & Services Tax Act - alternative efficacious remedy available in the form of appeal or not - HELD THAT:- Much has been pressed into service by learned Assistant Government Pleader urging that the Court need not indulge when there is efficacious remedy available under the statute. Ordinarily, this Court by way of self-restraint chose not to interfere where there is statutory remedy provided it is otherwise alternative and efficacious. However, there are notable exceptions, under which the Court always entertains the writ petition. One of them is breach of the principles of natural justice, that is one issues which has been reiteratively harped upon by the petitioner. The show cause notice that had been issued under section 129 and thereafter under section 130 of the CGST Act is only to the truck driver and neither to the truck owner nor to the petitioner in its capacity of the owner of the goods. The respondent has unsuccessfully pointed out to the Court as to how there has been representation on the part of the owner of the goods at the stage of passing the order under MOV 11. However, the respondent has not pointed out as to whether any show cause notice was issued to any of these or whether any opportunity of hearing had been availed. Admittedly, there is no show cause notice issued to the owner of the goods, at any juncture. Unlike in the case of SITARAM ROADWAYS (URP) THROUGH PROPRIETOR VASHRAMBHAI ARJANBHAI DANGAR VERSUS STATE OF GUJARAT [2019 (10) TMI 665 - GUJARAT HIGH COURT] where there was a show cause notice issued to the petitioner and the date had also been fixed for hearing and where the allegation was of only passing the order without affording the opportunity of hearing and that too by a non-speaking order, in the instant case, what is to be noticed glaringly is a complete absence of any notice and gross violation of principles of natural justice. The petitioner, who is the owner of the goods has not been afforded the opportunity at all as no service of show cause notice is also made to the petitioner and the opportunity was only afforded to the driver. Surprisingly, expressed show cause notice was only to the driver and to none else. This Court notices that neither to the petitioner nor to the owner of the conveyeance bearing No.GJ-01-JT-0689, which was intercepted by the State Tax Officer, any notice of show cause had been issued. The order impugned is in the complete breach of the principles of natural justice for not having issued the show cause notice in the first place and not even having afforded any opportunity of hearing to the petitioner. Quashment of the order will sub-serve the purpose and hence the impugned order passed by the competent authority dated 15.09.2021 will need to be quashed and set aside - the matter is restored to the file of the respondent NO.3 to issue the notice under section 130 of the GGST and CGST Act and to decide the matter afresh in accordance with law - petition allowed. Issues Involved:1. Violation of Principles of Natural Justice2. Issuance of Show Cause Notice3. Opportunity of Hearing4. Imposition of Redemption Fine5. Alternative Efficacious RemedyDetailed Analysis:1. Violation of Principles of Natural Justice:The petitioner challenged the order in Form GST MOV-11 dated 15.09.2021 on the grounds of violation of natural justice principles and Section 130 of the CGST Act. The petitioner argued that the order was passed without serving a copy or granting an opportunity of hearing. The court emphasized that the principles of natural justice were violated as no show cause notice was issued to the petitioner, and no opportunity of hearing was provided. The court referenced previous judgments (Sitaram Roadways and Synergy Fertichem Pvt. Ltd.) to highlight the necessity of adhering to natural justice principles, such as issuing a show cause notice and providing a hearing before passing any adverse order.2. Issuance of Show Cause Notice:The court noted that the show cause notice under Section 129 and 130 of the CGST Act was issued only to the truck driver and not to the petitioner or the truck owner. The respondent failed to demonstrate any representation by the owner of the goods at the time of passing the order under MOV 11. The court found that the absence of a show cause notice to the petitioner constituted a gross violation of natural justice.3. Opportunity of Hearing:The petitioner argued that they were not given an opportunity to be heard before the order was passed. The court observed that the respondent did not provide any evidence of a hearing opportunity being given to the petitioner. The court reiterated the importance of providing a hearing opportunity, as emphasized in the cited judgments, and found that the respondent's actions were in clear violation of this requirement.4. Imposition of Redemption Fine:The petitioner had already paid the tax and penalty amounting to Rs. 2,28,038/-, but the goods were not released due to the imposition of a redemption fine equivalent to the value of the goods (Rs. 22,80,362/-). The court referred to the Synergy Fertichem Pvt. Ltd. judgment, which highlighted that the imposition of a redemption fine should reflect the seriousness of the contravention and should not be the maximum fine in every case. The court found that the respondent's imposition of the maximum fine without considering the specifics of the case was inappropriate.5. Alternative Efficacious Remedy:The respondent argued that the petitioner had an alternative efficacious remedy available under Section 107 of the CGST Act. However, the court noted that exceptions to this rule exist, particularly in cases of natural justice violations. Given the clear breach of natural justice principles, the court chose to entertain the writ petition despite the availability of an alternative remedy.Conclusion:The court quashed and set aside the impugned order dated 15.09.2021 due to the violation of natural justice principles. The matter was restored to the file of respondent No.3 to issue a proper show cause notice under Section 130 of the CGST Act and to decide the matter afresh, providing a reasonable opportunity of hearing to the petitioner. The court directed the release of the conveyance and goods within seven days from the receipt of the order, subject to the final outcome of the proceedings under Section 130 of the CGST Act. The petition was disposed of accordingly.