Petitioner allowed to challenge GST assessment despite missing hearing deadlines under Section 17(2) input tax credit reversal

Gujarat HC allowed petition challenging GST assessment order where petitioner failed to reverse input tax credit on exempt supplies under Section 17(2). Despite petitioner's non-appearance at personal hearing and failure to respond within stipulated time, court found violation of natural justice principles. Petitioner had subsequently reversed the credit but received electronic demand notice through bank. Court condoned limitation period, allowing petitioner to approach Appellate Authority to challenge the finalized assessment, keeping larger legal issues open for determination.

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Issues Involved:
Challenge to action of respondent authority as violative of natural justice principles under Article 226 of the Constitution of India.

Analysis:
1. The petitioner challenged the respondent authority's action, alleging a violation of natural justice principles. The petitioner, engaged in trading activities, received a show cause notice under Section 73 of the CGST Act regarding ITC reversal. Despite requesting an adjournment, the petitioner failed to respond due to GST return filing obligations. Subsequently, search proceedings were conducted, and the petitioner reversed the ITC. The petitioner sought various reliefs, including quashing the order, re-crediting the amount, and removing the bank lien.

2. The petitioner's counsel argued that despite the adjournment and personal hearing being granted, the adverse decision lacked a mandatory personal hearing, citing a previous court decision. The respondent contended that the adjournment and personal hearing were granted, but the petitioner failed to respond, leading to the order being passed after search proceedings. The respondent emphasized compliance with directions and the petitioner's lack of action.

3. The court noted the petitioner's adjournment request for 15 days, not 30, and the granted personal hearing opportunity. The petitioner's non-compliance and lack of follow-up post the adjourned date were highlighted. The court differentiated this case from a previous judgment due to distinct facts. Despite the search and subsequent actions, the petitioner's inaction until June was deemed his responsibility, not the officer's fault.

4. The court allowed the petition, permitting the challenge to the order before the Appellate Authority within two weeks. The authority was directed to decide the appeal independently, providing due opportunity to the petitioner. The petitioner could seek recredit of the amount, excluding pre-deposit, with no coercive recovery until a decision. Direct service of the order through e-mode was also permitted for efficient communication.

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