2024 (2) TMI 124 - HC - GST

GST assessment orders under sections 73 and 75(4) set aside for denying mandatory hearing opportunity to taxpayers

M/s IJM Concrete Products Pvt. Ltd. Versus The State Of Madhya Pradesh Principal Secretary Commercial Tax Department And State Goods And Service Tax, The Commissioner Of Commercial Tax, The Assistant Commercial Tax Officer (State Tax Officer)

The MP HC set aside GST assessment orders under sections 73 and 75(4) for violating natural justice principles. The court held that despite no specific ... Violation of principles of natural justice - Assessment u/s 73 r.w.s. 75(4) - Validity of summary of order in form GST DRC-07 issued in consequence of Assessment order - demand for excess Input Tax Credit inclusive of interest and penalty, on the ground that the said order has been passed in an ex-parte proceedings without providing an opportunity of personal hearing to the Petitioner - HELD THAT:- The language employed in sub-section 4 of Section 75 of the Act leaves no room for any doubt that the word ‘or’ is used by the law makers for a specific purpose. Although, in the first portion of the statute, i.e. subsection 4 of Section 75 of the Act, the statute talks about a specific request, the portion after the word ‘or’ makes it clear like cloudless sky that opportunity of hearing is required to be given, even in those cases where no such request is made but adverse decision is contemplated against such person. 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. 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 - Petition disposed off. Issues involved:The issues involved in the judgment are violation of principles of natural justice, failure to provide opportunity of personal hearing, and non-adherence to statutory provisions under the Madhya Pradesh Goods & Service Tax Act, 2017.Violation of Principles of Natural Justice:The petitioner challenged a summary order issued under the Madhya Pradesh Goods & Service Tax Act, 2017, alleging that it was passed in ex-parte proceedings without providing an opportunity for personal hearing. The petitioner argued that this violated settled principles of natural justice and fair hearing. The order was also criticized for failing to adhere to Rule 142(1A) of the CGST Rules, 2017. The court noted that the petitioner was not afforded the opportunity of personal hearing as required by Section 73(9) of the Act, which mandates considering representations made by the Assessee before determining tax, interest, and penalty.Opportunity of Hearing Mandate:The court examined Section 75(4) of the CGST Act/MPGST Act, which stipulates that an opportunity of hearing must be granted before passing an adverse order against the Assessee. The petitioner's counsel argued that this provision is mandatory and must be fulfilled even if no specific request for a personal hearing is made. The court cited relevant case law to support the importance of providing a fair hearing, emphasizing the distinction between 'opportunity of hearing' and 'personal hearing'.Statutory Interpretation and Decision:The court analyzed the language of sub-section 4 of Section 75 of the Act, emphasizing the requirement to grant an opportunity of hearing in cases where an adverse decision is contemplated, regardless of a specific request. The court rejected the state's argument that 'opportunity of hearing' did not include 'personal hearing', noting that different stages are envisioned for personal hearing in the statutory form. Consequently, the court found that the decision-making process was flawed due to the lack of personal hearing, and set aside the impugned proceedings, directing the respondents to provide the petitioners with a proper opportunity of hearing.Disposition of Writ Petitions:Both writ petitions were disposed of, with the court setting aside the proceedings after the show cause notices and ordering a reevaluation with proper opportunity of hearing. The court clarified that no opinion on the merits of the case was expressed in the judgment, ensuring fairness and adherence to legal procedures.