Natural justice in GST demand proceedings led to remand for fresh consideration and an opportunity to reply

A GST demand based on alleged wrongful availment of Input Tax Credit was set aside for breach of natural justice, as the taxpayer claimed the notices were not effectively communicated despite upload of the show cause and personal hearing notices. The HC restored the matter for fresh consideration to ensure an effective opportunity to contest the demand on merits, and required the taxpayer to pay 10% of the disputed tax demand before re-adjudication. The taxpayer was also permitted to file a reply to the show cause notice and given a personal hearing.

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Issues: Whether the order confirming the GST demand was liable to be set aside for breach of natural justice and the matter remanded for fresh consideration.

Analysis: The order under challenge related to alleged wrongful availment of Input Tax Credit. The record showed that a show cause notice had been issued and that a personal hearing notice had also been uploaded, but the petitioner contended that it was unaware of the proceedings because the notices were not communicated through any other mode. In view of the need to afford an effective opportunity to contest the demand on merits, the Court found it just to restore the matter, while putting the petitioner on terms by requiring payment of 10% of the disputed tax demand and permitting a reply to the show cause notice.

Conclusion: The impugned order was set aside and the matter was remanded for reconsideration, with opportunity for reply and personal hearing, subject to payment of 10% of the disputed tax demand.

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