2024 (8) TMI 835 - HC - GST

Taxpayer Wins Challenge Against Recovery Proceedings, Secures Fresh Hearing Opportunity Under Procedural Fairness Principles

HC found procedural irregularities in recovery proceedings against taxpayer. Court set aside impugned order and DRC-07 notice, directing respondent to ... Violation of principles of natural justice - petitioner has not appeared, when was provided by opportunity of personal hearing - HELD THAT:- In the present case, Form DRC-01 was issued and the petitioner filed a detailed counter. When the personal hearing opportunity was provided, he has not appeared. In those cases, the respondent ought to have granted one more opportunity. However, the respondent has failed to do the same. In this circumstance, both learned counsel for the petitioner submitted that there is a scheme available under Rule 128 of the Act and the petitioner intended to avail the same in the event the impugned order is setting aside and remanding the matter to the appellate authority for consideration after providing opportunity of personal hearing to give quietus to the present dispute. Taking into consideration these aspects, this Court feels that it would be appropriate to give one more opportunity of personal hearing to the petitioner. Hence, the impugned order as well as the attachment order passed by the respondent dated 22.12.2023 are set aside. Petition allowed. Issues:1. Violation of principles of natural justice in the initiation of recovery proceedings.2. Adequacy of opportunities provided to the petitioner for personal hearing.3. Applicability of Rule 128 of the Act in the present case.Analysis:The petitioner filed a Writ Petition seeking the issuance of a Writ of Certiorari to quash the impugned order in GSTIN-33AAUCS8334E1Z2/2017-18 and the consequential DRC-07. The petitioner contended that the respondent initiated scrutiny proceedings, issued show cause notices, and passed orders without providing sufficient opportunities for the petitioner to present their case, thereby violating the principles of natural justice. The respondent had initiated recovery proceedings by marking lien on the petitioner's bank accounts. The petitioner, unaware of the impugned order, was only informed after funds were appropriated from their Axis Bank account. The petitioner argued for the applicability of Rule 128 of the Income Tax Rules to avail benefits and requested another opportunity for personal hearing.The Government Advocate for the respondent argued that the petitioner was duly served with show cause notices and opportunities for personal hearing, which were not utilized by the petitioner. Therefore, the respondent's actions were not in violation of natural justice principles. The respondent had proceeded with the impugned order and recovery proceedings after the petitioner failed to appear for the scheduled personal hearing.After hearing both parties, the Court noted that although the petitioner had not appeared for the initial personal hearing, the respondent should have granted another opportunity considering the circumstances. The Court acknowledged the availability of a scheme under Rule 128 of the Act and decided to provide the petitioner with another chance for a personal hearing. Consequently, the impugned order and attachment order were set aside, and the matter was remanded back to the respondent for reconsideration. The Court directed the respondent to send a physical notice to the petitioner, providing 14 days for a personal hearing. The Writ Petition was allowed with no order as to costs.