GST Order Overturned: Natural Justice Violation Leads to Procedural Reset with Partial Tax Deposit Requirement

HC allowed writ petition challenging GST order due to breach of natural justice. Court set aside original order, directing petitioner to deposit 10% of disputed tax and submit reply within two weeks. Respondent must provide opportunity for hearing and issue fresh order within three months, ensuring fair process and procedural compliance.

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Issues involved:
Challenge based on breach of principles of natural justice in an order regarding denial of Input Tax Credit under GST enactments.

Analysis:

1. The petitioner challenged an order dated 22.06.2023, alleging a breach of natural justice principles due to lack of communication regarding the proceedings leading to the order. The petitioner claimed unawareness as the show cause notice and other communications were uploaded on the GST portal but not communicated through any other mode. This formed the basis of the writ petition filed.

2. The tax proposal in question involved the denial of Input Tax Credit concerning a purchase made by the petitioner under sub-section (5) of Section 17 of relevant GST enactments. The petitioner had made specific payments towards SGST and CGST, and the counsel agreed, without prejudice, to remit 10% of the disputed tax demand in cash as a condition for remand.

3. The Additional Government Pleader for the respondent pointed out that the earlier payments by the petitioner were debited from the electronic credit ledger, which could not be considered for pre-deposit purposes.

4. Upon scrutiny of the impugned order, it was noted that the tax proposal was confirmed due to the petitioner's failure to respond. Given the petitioner's claim of being unaware of the proceedings, the court deemed it necessary in the interest of justice to provide an opportunity to the petitioner, albeit subject to certain conditions.

5. The court set aside the impugned order on the condition that the petitioner remit 10% of the disputed tax demand in cash within two weeks from receiving a copy of the order. The petitioner was also allowed to submit a reply to the show cause notice within this period. Once the respondent verified the receipt of the 10% payment, they were directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and issue a fresh order within three months from receiving the petitioner's reply.

6. The writ petition was disposed of based on the above terms, with no costs imposed. Subsequently, related miscellaneous petitions were closed as well.

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