Imported Broomsticks Tax Case: IGST Exemption Order Overturned Due to Procedural Violations of Natural Justice Principles

HC quashed the Order-In-Original for breaching natural justice principles in IGST exemption dispute involving imported broomsticks. The court remanded the matter back to the adjudicating authority, directing a fresh hearing within twelve weeks and allowing the petitioner to present all contentions. The order was set aside due to procedural irregularities in the original adjudication process.

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Issues:
1. Interpretation of IGST exemption notifications for imported broomsticks.
2. Breach of principles of natural justice in passing the Order-In-Original.
3. Availability of alternative remedy for challenging the impugned order.

Analysis:
1. The petitioner sought relief under Article 227 for exemption of imported broomsticks from IGST under specific notifications. The petitioner argued that broomsticks made from coconut leaves fall under the exemption criteria mentioned in the notifications. The Central Government's power to grant tax exemptions under Section 6 of the IGST Act was highlighted, along with amendments to the notifications affecting the IGST rate on broomsticks. The petitioner contended that their broomsticks should not be subject to the 5% IGST levy imposed by the impugned Order-In-Original dated 31.12.2020 for the specified period.

2. The petitioner raised concerns about the breach of natural justice principles in the adjudication process. It was argued that the adjudicating authority did not consider the petitioner's response to the show-cause notice, and the petitioner could not attend the hearing due to the COVID-19 pandemic. The petitioner also pointed out inconsistencies in the application of IGST rates post-December 2018, emphasizing that their broomsticks were not explicitly covered for IGST levy or exemption. The petitioner asserted that their broomsticks, being made of vegetable material as per the notifications, should not have been subjected to the 5% IGST rate from January 2019 onwards.

3. On the other hand, the respondent contended that the petitioner had an alternative remedy available through an appeal to challenge the impugned Order-In-Original. While acknowledging the petitioner's reliance on a specific notification for exemption, the respondent argued that the broomsticks imported by the petitioner were correctly subjected to the 5% IGST rate under entry no. 260. Despite this, both parties agreed that the impugned order violated principles of natural justice by not providing a fair hearing and disregarding the petitioner's response to the show-cause notice.

In conclusion, the High Court quashed the impugned Order-In-Original dated 31.12.2020 due to the breach of natural justice principles and remanded the matter back to the adjudicating authority for a fresh decision. The Court directed the authority to conduct a new hearing, allowing the petitioner to present all contentions raised in the petition within twelve weeks. The petition was disposed of, with notice discharged.

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