Bombay HC quashes adjudication order for denying fair hearing and proper notice in show cause proceedings

The Bombay HC quashed an Order-in-Original passed by an adjudicating officer for unfair adjudication of a show cause notice. The petitioner was denied opportunity to raise preliminary objections and was not given proper notice that the show cause notice itself would be decided rather than just preliminary objections. The court held that quasi-judicial adjudication requires fairness and proper opportunity to be heard. The adjudicating officer failed to provide clear notice about the scope of adjudication, taking the petitioner by surprise. The matter was remanded for fresh consideration of all issues including preliminary objections.

---

---

Issues involved: Challenge to show cause notice u/s Article 226 of the Constitution of India, violation of procedural rules in adjudication process.

Summary:

Challenge to Show Cause Notice:
The petitioner challenged a show cause notice issued by Respondent No. 1, seeking various reliefs including a declaration that the notice was ultra vires certain sections of the CGST Act. The court allowed the petitioner to raise preliminary objections regarding the notice, which were to be considered separately from the main adjudication. However, the adjudicating officer proceeded to decide the show cause notice itself, leading to the petitioner filing additional prayers to set aside the Order-in-Original. The petitioner argued that the adjudication was unfair as it did not follow the court's order to first decide the preliminary objections. The court agreed with the petitioner, stating that the adjudicating officer should have granted an opportunity to raise all contentions before deciding the show cause notice. The impugned Order-in-Original was quashed, and the proceedings were remanded for a fresh order to be passed after allowing the petitioner to submit relevant documents.

Violation of Procedural Rules:
The court noted that the adjudicating officer failed to provide a clear notice that final adjudication on the show cause notice would take place, as required in quasi-judicial adjudication. The petitioner was not given the opportunity to present relevant documents, and there was a lack of communication regarding the intention to decide the show cause notice. The court emphasized the importance of fairness and proper procedure in adjudication and criticized the department for overlooking the court's order. Consequently, the impugned Order-in-Original was set aside, and the proceedings were remanded for a fresh decision after granting the petitioner a fair opportunity to present their case.

---