2023 (5) TMI 1182 - HC - GST

Tax Order Quashed: Procedural Fairness Prevails, Section 75(4) Violation Leads to Order Reversal and Rehearing

The HC allowed the writ petition challenging a tax order under CGST/UPGST Act. The court found a breach of natural justice due to lack of proper personal ... Validity of show cause notice - Insufficient details in the SCN - no date, time and venue for personal hearing was shown in the notice - Section 74 of MPGST Act - HELD THAT:- The show cause notice dated 22.07.2022 (Annexure P/3) issued under Section 74 of the Act, itself shows that before passing final order dated 24.08.2022 (Annexure P/4), the intention of the respondents was to give personal hearing to the petitioner as required under the law, but in the table given below, captioned as “Details of personal hearing etc.”, no Date, Time and Venue of personal hearing has been shown and in front of columns 3,4&5 of Date, Time and Venue, NA has been mentioned, which is sufficient to infer that no personal hearing was given to the petitioner before passing the impugned order dated 24.08.2022. Availability of alternative remedy of appeal - HELD THAT:- It is well settled that when due opportunity of hearing, as required under the law, has not been afforded and principle of natural justice has not been followed, then the question of availability of alternative remedy does not come in the way for exercising jurisdiction under Article 226 of the Constitution of India. The matter is remitted back to the Deputy Commissioner, Audit Wing, Jabalpur for passing order afresh, after giving personal hearing to the petitioner - Petition allowed by way of remand. Issues involved: Challenge to order under section 74 of MPSGST/CGST Act, 2017 and section 20 of IGST Act, 2017 for upholding tax, interest, and penalty without affording personal hearing as required by law.Issue 1: Opportunity of personal hearing under Section 75(4) of the ActThe petitioner challenged the order dated 24.08.2022 passed under section 74 of the Act, contending that personal hearing was necessary before passing the order, as mandated by Section 75(4) of the Act. The petitioner argued that the show cause notice lacked details of personal hearing, rendering the subsequent order unsustainable. Citing the Allahabad High Court decision in Bharat Mint & Allied Chemicals Vs. Commissioner of Commercial Tax, the petitioner emphasized the mandatory nature of personal hearing under the Act.Issue 2: Breach of natural justice and quashing of adjudication orderThe key questions before the court were whether personal hearing is mandatory under Section 75(4) of the CGST/UPGST Act, 2017, and whether the impugned order breached the principle of natural justice. The court noted that the show cause notice did not specify the date, time, and venue for personal hearing, as required by the Act. Section 75(4) mandates granting an opportunity of hearing where an adverse decision is contemplated, without the need for a specific request. The court held that the absence of a proper personal hearing rendered the impugned order unsustainable and in violation of natural justice principles.Conclusion:The court found that the impugned order lacked a proper personal hearing, as required by law, and therefore quashed the order. The matter was remitted back to the Deputy Commissioner for a fresh order after affording the petitioner a proper personal hearing. The court emphasized that the availability of an alternative remedy of appeal does not preclude the exercise of jurisdiction under Article 226 when there is a failure to adhere to the principles of natural justice. The writ petition was allowed, with no costs awarded, and any interim applications were disposed of accordingly.