2024 (4) TMI 1031 - HC - GST

Opportunity of Hearing under CGST Act breached by absence of personal hearing; order set aside and remitted for hearing.

Non-compliance with statutory hearing requirements under the CGST framework was central: the authority issued an adverse order without granting the ... Right to meaningful opportunity of hearing - principle of audi alteram partem - natural justice in quasi-judicial proceedings - statutory mandate of hearing under Section 75(4) and (5) of the CGST Act, 2017 - determination of tax under Section 73 of the CGST Act, 2017 - writ jurisdiction under Article 226 for breach of natural justiceStatutory mandate of hearing under Section 75(4) and (5) of the CGST Act, 2017 - right to meaningful opportunity of hearing - natural justice in quasi-judicial proceedings - Whether the statutory requirement of granting a meaningful opportunity of hearing under Section 75(4) and (5) of the CGST Act was complied with before passing the adverse order dated 29.12.2023. - HELD THAT: - The Court examined the show-cause notice timeline and the sequence of personal hearing dates vis-a -vis the deadline for filing reply. Although personal hearing dates of 11.10.2023 and 25.10.2023 were recorded, the notice fixed the last date to file reply as 30.10.2023 and the appellant sought adjournments and sought to file reply within the prescribed timeline. The Court held that an opportunity of hearing must be real and meaningful - not a preponed hearing which defeats the purpose of allowing the assessee to file substantive replies before an oral hearing. Relying on established authorities emphasising adequate notice, reasonable time to prepare defence and the primacy of oral hearing in adjudicatory processes, the Court concluded that Section 75(4) was effectively bypassed and that the procedure adopted before passing the impugned order was contrary to the principles of natural justice. Consequently the matter could not be permitted to stand without affording the appellant the statutory hearing mandated by sub-sections (4) and (5). [Paras 13, 14, 15, 16, 18]The Court held that the requirement of a real and meaningful opportunity of hearing under Section 75(4) and (5) was not complied with and directed that the appellant be afforded personal hearing before the adjudicating authority.Determination of tax under Section 73 of the CGST Act, 2017 - writ jurisdiction under Article 226 for breach of natural justice - Whether the learned Single Judge was correct in non-suiting the appellant on the ground of alternate remedy and refusing relief under Article 226 where principles of natural justice were alleged to have been violated. - HELD THAT: - The High Court reviewed the Single Bench order which had dismissed the writ petition on the basis of availability of alternate remedy. Given the Court's finding that the statutory hearing mandated by Section 75(4) and (5) was not afforded, the proceedings were held to be in breach of principles of natural justice. The Court reiterated the settled principle that where quasi judicial proceedings are in breach of natural justice, the High Court's writ jurisdiction under Article 226 is available. Applying that principle to the facts, the High Court found the Single Bench's non suiting to be unsustainable and set aside the impugned order. [Paras 1, 16, 17]The Single Bench order was set aside; the writ remedy was held to be maintainable in view of the breach of natural justice and the appeal was allowed.Final Conclusion: The Single Bench order dated 21.03.2024 is set aside. The impugned adjudicatory order dated 29.12.2023 is quashed to the extent that the appellant was not afforded the statutory and meaningful opportunity of hearing; the matter is remitted to the Joint Commissioner of State Tax for personal hearing (fixed by the Court for 08.05.2024) and fresh consideration in accordance with law. Issues Involved:1. Alternate Remedy2. Opportunity of Hearing3. Principles of Natural Justice4. Statutory ComplianceSummary:1. Alternate Remedy:The appeal is against the Order dated 21.03.2024 in Writ Petition (Tax) No. 42 of 2024, where the appellant was non-suited on the ground of alternate remedy.2. Opportunity of Hearing:The appellant, a regular assessee, was served a notice u/s 73(1) of the CGST Act, 2017, for a contemplated tax not paid or short paid on 29.09.2023. The appellant sought an extension for reply, but an adverse order was passed on 29.12.2023 without granting an opportunity of hearing, violating Section 75(4) of the CGST Act. The appellant argued that the principles of natural justice were defeated and relied on the Supreme Court's decision in Kalpraj Dharamshi v. Kotak Investment Advisors Limited, which allows invoking jurisdiction under Article 226 of the Constitution when natural justice is violated.3. Principles of Natural Justice:The court emphasized that Section 75(4) mandates a comprehensive opportunity of hearing. The show cause notice indicated a reply date of 30.10.2023, but personal hearings were scheduled before this date, which is against the normal procedure and legislative intent. The Supreme Court has held that a meaningful opportunity of hearing must be provided, as seen in Umanath Pandey v. State of UP and Dharampal Satyapal Ltd. v. CCE. Oral hearings are crucial for adjudication, as highlighted in Automotive Tyre Manufacturers Assn. v. Designated Authority and the US case of Goldberg v. Kelly.4. Statutory Compliance:The court found that sub-Section 4 of Section 75 of the CGST Act was not complied with before passing the order dated 29.12.2023. The Supreme Court in Kalpraj Dharamshi stated that breach of natural justice allows invoking High Court jurisdiction under Article 226. The court disagreed with the Single Bench's order and set it aside, emphasizing that statutory mandates of hearing must be upheld.Conclusion:The court allowed the appeal, directing the parties to appear before the Joint Commissioner of State Tax on 08.05.2024 for a personal hearing as per the mandate of sub-Sections (4) and (5) of Section 75 of the CGST Act.