2024 (1) TMI 1208 - HC - GST

GST officer must provide personal hearing opportunity before demanding excess Input Tax Credit under Section 74

M/s PATANJALI AYURVED LIMITED Versus THE STATE OF MADHYA PRADESH THROUGH ITS SECRETARY COMMERCIAL TAX, VALLABH BHAWAN-III BHOPAL (MADHYA PRADESH), COMMISSIONER OF COMMERCIAL TAX COMMERCIAL TAX OFFICE MG ROAD INDORE (MADHYA PRADESH), DEPUTY COMMISSIONER OF STATE TAX DIVISION 5TH FLOOR, CHETAK CHAMBER, 13-14 RNT MARG INDORE (MADHYA PRADESH)

MP HC set aside GST proceedings demanding excess Input Tax Credit with interest and penalty under Section 74. The court found violation of natural justice ... Demand for excess Input Tax Credit (ITC) along with interest and penalty u/s 74 - Reversal of excess Input Tax Credit availed - Order passed without considering the submissions of petitioner and also without providing an opportunity of hearing to the petitioner - violation of principles of natural justice - HELD THAT:- In the instant case whether or not the petitioners have specifically asked for personal hearing, fact remains that the adverse decision was contemplated against the petitioners. In that event, it was obligatory and mandatory on the part of respondents to provide the petitioners opportunity of personal hearing. Admittedly, no opportunity of personal hearing has been provided in both the matters. Resultantly, the decision making process adopted by the respondents is vitiated and runs contrary to the principles of natural justice and statutory requirement of sub-section 4 of Section 75 of GST Act. As a result, the impugned proceedings after the stage of reply of show cause notices, in both the cases are set-aside. The respondents shall provide opportunity of hearing to the petitioners in both the cases by some other officer than the officer who has issued the show cause notice as per M/S ULTRATECH CEMENT LIMITED HAVING OFFICE AT UNIT VIKRAM CEMENT WORKS THRU. ITS AUTHORIZED REPRESENTATIVE MR. VINOD KUMAR SONI S/O SHRI OM PRAKASH VERSUS UNION OF INDIA, STATE OF MADHYA PRADESH, DEPUTY COMMISSIONER OF STATE TAX UJJAIN-2 [2023 (1) TMI 1027 - MADHYA PRADESH HIGH COURT]. Both the writ petitions are disposed of. Issues involved: Violation of principles of natural justice in passing an order under Section 74 of the CGST Act/MPGST Act without considering petitioner's submissions or providing an opportunity of hearing.Summary of Judgment:Issue 1: Violation of Principles of Natural JusticeThe petitioner challenged an adjudication order under Article 226 of the Constitution, where a demand for excess Input Tax Credit (ITC) was raised without considering the petitioner's submissions or providing a hearing. The order was passed under Section 74 of the CGST Act/MPGST Act, which mandates considering the representation made by the assessee before determining tax, interest, and penalty. The petitioner argued that the order disregarded the principles of natural justice by not providing an opportunity of being heard, as required by Section 75(4) of the Acts. The court noted that the provision mandates granting an opportunity of hearing where an adverse decision is contemplated, regardless of a specific request for a personal hearing. The court emphasized that the word 'or' in the statute indicates that hearing must be granted even if no specific request is made but an adverse decision is anticipated. The court held that the absence of a personal hearing in the present case violated the principles of natural justice and statutory requirements, setting aside the proceedings and directing a re-hearing by a different officer.ConclusionThe court found that the impugned proceedings were flawed as they did not provide the petitioner with an opportunity of personal hearing despite an adverse decision being contemplated. The court set aside the proceedings and directed a re-hearing by a different officer, emphasizing the importance of adhering to principles of natural justice and statutory requirements in such cases. The court clarified that its decision did not express any opinion on the merits of the case, disposing of both writ petitions accordingly.