2025 (1) TMI 189 - HC - GST

Court Overturns Order for Ignoring Petitioner's Reply, Emphasizes Need for Procedural Fairness and Natural Justice Principles.

M/s. Naoariuna Shutters Engineering Work, Versus Assistant Commissioner, State of Telangana, Union of India, Central Board of indirect Taxes and Customs M/s. R.K. Engineers Hyderabad

The court set aside the impugned order dated 09.05.2024 due to the failure to consider the petitioner's reply, which violated principles of natural ... Violation of principles of natural justice - failure to consider the petitioner's reply - singular contention is that the exercise of issuance of show-cause notice should not be an empty formality - HELD THAT:- In furtherance of show-cause notice, the petitioner filed reply which has not been considered. This exercise of issuance of notice and obtaining a reply, in our opinion, is not an empty public relation exercise. Instead, it is the codification of principles of natural justice in the statute and the said principle mandates that said reply be obtained before passing any adverse order and there must be an application of mind by considering the reply of the petitioner. In the instant case, in a hasty manner, without application of mind, the impugned order has been passed. Conclusion - The issuance of a show-cause notice and the consideration of any reply thereto are integral to the principles of natural justice. Failure to consider a reply before passing an adverse order constitutes a breach of natural justice. The impugned order dated 09.05.2024 is set aside by reserving liberty to the respondents to consider the reply of petitioner and pass a fresh order - Petition disposed off. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions addressed in this judgment are:Whether the issuance of a show-cause notice and the subsequent non-consideration of the petitioner's reply violates principles of natural justiceRs.Whether the impugned order, passed without considering the petitioner's reply, is legally sustainableRs.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Non-consideration of the Petitioner's ReplyRelevant Legal Framework and Precedents:The principles of natural justice demand that any person affected by a decision should be given a fair opportunity to present their case. This includes the right to be heard and the obligation of the decision-making authority to consider any representations made by the affected party.Court's Interpretation and Reasoning:The court emphasized that the issuance of a show-cause notice is not merely a procedural formality but a substantive requirement grounded in the principles of natural justice. The court observed that the petitioner's reply to the show-cause notice was not considered, which constitutes a violation of these principles.Key Evidence and Findings:The court relied on the admission in the impugned order itself, which stated that the petitioner's reply was not considered. This admission was crucial in establishing the procedural lapse.Application of Law to Facts:The court applied the principles of natural justice to the facts, concluding that the failure to consider the petitioner's reply rendered the decision-making process flawed. The court noted that the statutory obligation to consider the reply was not fulfilled, thereby invalidating the impugned order.Treatment of Competing Arguments:The Special Government Pleader for State Tax conceded the procedural infirmity, agreeing that the impugned order suffered from the defect pointed out by the petitioner. This concession simplified the court's task in resolving the issue.Conclusions:The court concluded that the impugned order was passed without due consideration of the petitioner's reply, violating the principles of natural justice. Consequently, the order was set aside, and the respondents were directed to pass a fresh order after considering the petitioner's reply.3. SIGNIFICANT HOLDINGSPreserve Verbatim Quotes of Crucial Legal Reasoning:The court stated, 'This exercise of issuance of notice and obtaining a reply, in our opinion, is not an empty public relation exercise. Instead, it is the codification of principles of natural justice in the statute and the said principle mandates that said reply be obtained before passing any adverse order and there must be an application of mind by considering the reply of the petitioner.'Core Principles Established:The issuance of a show-cause notice and the consideration of any reply thereto are integral to the principles of natural justice.Failure to consider a reply before passing an adverse order constitutes a breach of natural justice.Final Determinations on Each Issue:The impugned order dated 09.05.2024 was set aside due to the non-consideration of the petitioner's reply.The respondents were granted liberty to pass a fresh order after duly considering the petitioner's reply and providing a personal hearing if required by law.The judgment underscores the importance of adhering to procedural fairness and the principles of natural justice in administrative decision-making processes. The court's decision to set aside the impugned order and direct a fresh consideration reflects its commitment to ensuring that statutory obligations are met and that affected parties are given a fair opportunity to present their case.