2024 (11) TMI 331 - HC - GST

GST officer's order set aside for denying natural justice after petitioner missed unnoticed show cause hearing

The Madras HC set aside an order dated 26.03.2024 for violating principles of natural justice. The petitioner was unaware of the show cause notice and ... Principles of natural justice - personal hearing - remand for fresh consideration - lifting of bank attachment - proviso to Rule 86B of the GST RulesPrinciples of natural justice - personal hearing - proviso to Rule 86B of the GST Rules - remand for fresh consideration - Impugned order dated 26.03.2024 was passed without providing opportunity of personal hearing and is vitiated for non-compliance with principles of natural justice; matter remitted for fresh consideration. - HELD THAT: - The Court found that the petitioner, falling within the exception in the proviso to Rule 86B of the GST Rules, was unaware of the show cause notice and was not afforded a personal hearing prior to passing of the impugned order. In these circumstances the order was passed in violation of the principles of natural justice. The Court concluded that it is just and necessary to permit the petitioner to establish its case on merits and therefore set aside the impugned order and remanded the matter to the 1st respondent for fresh consideration. The Court directed that the petitioner shall file its reply/objection with documents within three weeks of receipt of the order, and on receipt the 1st respondent shall issue a clear 14 days notice fixing a date for personal hearing and thereafter pass appropriate orders on merits and in accordance with law, after hearing the petitioner, as expeditiously as possible. [Paras 8]Impugned order set aside and matter remanded for fresh consideration with directions to receive petitioner's reply, afford 14 days notice fixing personal hearing and thereafter decide on merits.Lifting of bank attachment - remand for fresh consideration - Bank attachment issued pursuant to the impugned order is unsustainable once the impugned order is set aside and is ordered to be released. - HELD THAT: - Having set aside the impugned order, the Court held that the consequential attachment of the petitioner's bank account could not survive. The Court directed the second respondent to release the attachment and de-freeze the bank account immediately upon production of a copy of the order. [Paras 8]Bank attachment lifted and the bank directed to release and de-freeze the petitioner's account on production of this order.Final Conclusion: Impugned order dated 26.03.2024 set aside; matter remanded for fresh consideration with directions to file reply within three weeks, to be afforded a 14-day notice for personal hearing and fresh adjudication on merits; bank attachment lifted and account to be released on production of this order. Issues:1. Challenge to impugned order dated 26.03.2024 passed by the 1st respondent under Rule 86B of the TNGST Act.2. Failure to provide an opportunity of personal hearing to the petitioner before passing the impugned order.3. Request to lift the bank attachment and de-freeze the bank account of the petitioner.4. Request for remittance of the matter back to the respondent subject to payment of 10% of the disputed amount by the petitioner.5. Interpretation of the exception carved out in Clause (a) of proviso to Rule 86B of the GST Rules.Detailed Analysis:1. The writ petition challenges the order passed by the 1st respondent under Rule 86B of the TNGST Act. The petitioner argued that due to paying income tax exceeding Rs. 1,00,000, they were entitled to avail 100% of the Input Tax Credit (ITC) instead of the usual 99%. The petitioner contended that the respondent uploaded notices on the GST portal without providing an opportunity for a personal hearing, leading to the filing of the petition.2. The petitioner claimed that they were not aware of the notices uploaded on the GST portal, which resulted in their failure to respond within the stipulated time. The absence of a personal hearing before passing the impugned order was highlighted as a violation of natural justice. The Court acknowledged the lack of opportunity for the petitioner to present their case and set aside the impugned order, emphasizing the importance of providing a fair hearing.3. The petitioner requested the Court to lift the bank attachment and de-freeze their bank account, which was issued by the 1st respondent. The Court, upon setting aside the impugned order, directed the immediate release of the bank attachment and the de-freezing of the petitioner's bank account upon the production of a copy of the order.4. The Additional Government Pleader for the 1st respondent requested the Court to remit the matter back to the respondent, subject to the petitioner paying 10% of the disputed amount. However, the Court did not mention any specific order regarding this request in the judgment.5. The interpretation of the exception in Clause (a) of the proviso to Rule 86B of the GST Rules was discussed, with the petitioner arguing that they were not liable to pay any tax amount based on this exception. The Court did not delve into a detailed analysis of this argument but emphasized the need for the petitioner to have an opportunity to explain their case before the respondent.