2022 (10) TMI 554 - HC - GST

Tax Orders Voided for Procedural Defect: Petitioner Granted Hearing Opportunity to Reargue GST Assessment for 2017-20

M/s HITECH SWEET WATER TECHNOLOGIES PVT. LTD. Versus STATE OF GUJARAT

HC found procedural irregularity in tax orders for GST years 2017-20. The court set aside three tax orders due to lack of personal hearing, directing ... Validity of reassessment orders - violation of principles of natural justice - opportunity of being heard not granted - HELD THAT:- There is no gainsaying that the impugned orders came to be passed without extending opportunity of personal hearing to the petitioner. In respect of the orders relating to three assessment years, the petitioner was not heard. While it is true that in reply in prescribed form given by the petitioner, in response to show-cause notice, the petitioner has indicated that he did not opt for personal hearing - Only on the ground of non-compliance of principles of natural justice in form of not giving opportunity of personal hearing and in order that the competent authority is enabled to decide afresh as per the statement of the learned AGP, the three impugned orders dated 19.04.2022 (Annexures-C-1 to C- 3 in the petition) issued by respondent no.2 are set aside. The competent authority, respondent, will give opportunity of personal hearing to the petitioner within three weeks from today and pass in accordance with law, fresh orders within two weeks from the date of affording such personal hearing - Petition is allowed. Issues:Challenge to tax orders under GST Act for financial years 2017-18, 2018-19, and 2019-20 based on lack of opportunity for personal hearing.Analysis:The petitioners challenged tax orders for three financial years under the GST Act, alleging a violation of natural justice as they were not granted an opportunity for personal hearing. The competent authority had called for tax payments, interest, and penalties for non-compliance within 30 days, failing which recovery actions were threatened under Sections 78 and 79 of the Act. The petitioners also contested show-cause notices issued earlier for the same years. The petitioner, a water filter machine manufacturer registered under the GST Act, regularly discharged tax liabilities through monthly returns. Show-cause notices claimed significant amounts for the respective years, leading to final orders determining substantial sums owed by the petitioner. The challenge was primarily based on the absence of a personal hearing, citing violations of natural justice principles and referring to relevant legal precedents like M/s. Alkem Laboratories Ltd. Vs. Union of India.The court acknowledged that the impugned orders were indeed passed without affording the petitioner a personal hearing, despite the petitioner indicating in the reply that they did not opt for one. The petitioner's counsel argued that this was an inadvertent mistake, emphasizing the importance of a personal hearing to present their case effectively. The Assistant Government Pleader (AGP) did not contest the legal position highlighted by the petitioner's counsel and agreed to provide the petitioner with a personal hearing within three weeks. Subsequently, fresh orders would be issued based on the reassessment. The court, solely on the grounds of the denial of natural justice, set aside the three tax orders issued by the competent authority and directed a fresh decision after the personal hearing, to be completed within two weeks from the date of the hearing.The court clarified that it did not delve into the merits of the case presented by either party, focusing solely on the procedural irregularity regarding the lack of a personal hearing. The petition was allowed to the extent mentioned, with direct service permitted for compliance with the court's directives.