GST Order Set Aside After Authority Issued Decision Before Response Deadline Expired, Violating Natural Justice Principles

The HC allowed an appeal against a GST order that violated natural justice principles. The appellant received a show cause notice on 29.03.2022 with seven days to respond, but the authority issued its order on 31.03.2022, prematurely cutting short the response period. The Court set aside both the Single Judge's dismissal and the GST order dated 31.03.2022, directing that this order be treated as a show cause notice. The appellant was given ten days to submit objections, with instructions for the authority to provide a personal hearing before passing a fresh order on merits. The bank guarantee was maintained pending the authority's decision.

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Issues:
Violation of principles of natural justice in passing the order dated 31.03.2022 under Section 129(3) of the GST Acts.

Analysis:
The High Court of Calcutta, comprising Hon'ble Justice T.S. Sivagnanam and Hon'ble Justice Hiranmay Bhattacharyya, heard an intra court appeal challenging an order dated 07.04.2022 passed in WPA 6146 of 2022. The appellant contended that the order dated 31.03.2022 under Section 129(3) of the GST Acts violated principles of natural justice. The Single Judge had dismissed the writ petition, directing the appellant to avail alternative remedy. The appellant argued that there was a violation of natural justice as they were granted seven days to reply to a show cause notice dated 27.03.2022, received late on 29.03.2022. The impugned order was issued on 31.03.2022, before the stipulated time limit, referencing objections filed by the appellant, which the appellant denied, stating it was a preliminary explanation letter. The Court found merit in the appellant's argument and set aside the order dated 31.03.2022.

The Court emphasized that when an opportunity is given to show cause, it must be effective and not a mere formality. It noted that the revenue's interest was safeguarded by the release of goods upon furnishing a bank guarantee and bond. Therefore, the Court concluded that the appellant should be granted adequate opportunity to present their case, and the authority should decide accordingly. Consequently, the order passed in the writ petition and the order dated 31.03.2022 were set aside. The appellant was directed to treat the order dated 31.03.2022 as a show cause notice and submit objections/reply within ten days. The authority was instructed to provide a personal hearing to the appellant's representative and pass a fresh order based on merit and in accordance with the law. The bank guarantee was to be maintained until the authority's decision. The appeal was allowed, and the connected application was disposed of accordingly.

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