Ex-parte adjudication order under section 73 JGST Act quashed for denying natural justice and proper hearing

The HC quashed an ex-parte adjudication order dated 15.09.2020 passed under section 73 of the JGST Act for violating principles of natural justice. The petitioner was neither provided relied-upon documents nor granted opportunity for personal hearing as mandated under sections 75(4) and 75(5) of the JGST Act. The court held that authorities must serve inspection reports and intelligence notes relied upon in proceedings. The matter was remitted back to the concerned authority to issue fresh notice, provide relied-upon documents, conduct proper hearing following natural justice principles, and pass a fresh order.

---

---

Issues:
1. Quashing of show cause notice under JGST Act
2. Quashing of ex-parte order under JGST Act
3. Unblocking credit ledger

Analysis:
1. The petitioner, a Partnership Firm, sought relief from a show cause notice issued under Reference no. 98 dated 30.07.2020 under section 73(1) and Rule 142(1) of the Jharkhand Goods and Services Taxes (JGST) Act. The petitioner argued that no fraud was involved in availing Input Tax Credit (ITC) as the supplier was registered and compliant. The court noted that the respondent failed to provide relied-upon documents to the petitioner, violating principles of natural justice and the Act. Citing the Ayaaubkhan Noorkhan Pathan case, the court emphasized the importance of providing documents to enable proper defense. It held the adjudication order passed without hearing and document verification was in violation of natural justice and JGST Act sections 75(4) and 75(5).

2. The petitioner also sought to quash the ex-parte order under Reference no. 201 dated 15.09.2020 under section 73(9) of the JGST Act. The respondent alleged fraudulent ITC availment by the petitioner from a non-existent dealer. The court found that the petitioner was not granted a proper opportunity of hearing before the assessment orders were passed. Notably, the absence of an order sheet raised concerns about procedural irregularities. The court emphasized the necessity of providing an opportunity of hearing before adverse decisions, as per JGST Act section 75(4). It referenced a previous case, M/s. Godavari Commodities Ltd. Vs. The State of Jharkhand & Ors, to support this stance. Consequently, the court quashed the adjudication order and remitted the matter for compliance with Section 75(4) and principles of natural justice.

3. The petitioner also requested the unblocking of a credit ledger worth Rs. 5,18,731/-, blocked prior to receiving the show cause notice under the JGST Act. The court's decision to quash the ex-parte order and remit the matter back to the authority for compliance with necessary provisions, including granting a personal hearing and providing relied-upon documents, indirectly addressed the issue of unblocking the credit ledger. The court's focus on ensuring procedural fairness and adherence to legal requirements underlined the importance of due process in tax matters.

In conclusion, the High Court of Jharkhand allowed and disposed of the writ application, emphasizing the significance of procedural fairness, opportunity of hearing, and document disclosure in tax assessment proceedings under the JGST Act.

---