2025 (2) TMI 383 - HC - Customs

GST authority violated natural justice under Section 75(4) by passing adverse order without proper show cause notice

Tata Projects Limited Versus Union of India, Central Board of Indirect Taxes and Customs, Commissioner of CGST and Central Excise Patna, Joint Commissioner, Central GST and Central Excise, Patna.

The Patna HC allowed a writ petition challenging an order under the Central Goods and Services Tax Act, 2017, despite availability of statutory appeal ... Maintainability of petition - availability of alternative remedy of appeal before the Appellate Authority before approaching the Court under Article 226 of the Constitution of India - principles of natural justice - HELD THAT:- Even litigant has a statutory remedy of appeal before the Appellate Authority, in that event in the ordinary course writ is not maintainable with certain exceptions, one of the exceptions is violation of principles of natural justice. Insofar as providing principle of natural justice is concerned, it is available in the statute namely sub-section (4) of Section 75 of Central Goods and Services Tax Act, 2017. Reading of the aforementioned statutory provision, it is crystal clear that before passing any adverse order an opportunity shall be provided to such person against whom adverse orders are likely to be passed. The respondents submitted that before passing impugned order show cause notice has been issued insofar as proposed adverse order passed. Assuming that show cause notice was issued in respect of adverse order, insofar as paragraph no. 5.0 of the impugned order, in that event there is no reference in the impugned order insofar as issuance of show cause notice and so also seeking petitioner’s explanation. Assuming that show cause notice was issued in that event there should have been a statement by the author of the impugned order dated 19.03.2024 to the extent that show cause notice was issued on a particular date, however, petitioner has failed to furnish his reply. In the absence of such material one has to draw inference that impugned order dated 19.03.2024 is in violation of sub-section (4) of Section 75 of Central Goods and Services Tax Act, 2017. Conclusion - The impugned order was in violation of the principles of natural justice as outlined in Section 75(4) of the Act. Matter is remanded to the concerned authority to proceed in accordance with law, such exercise shall be completed within a period of six months from the date of receipt of this order, after adherence to the respective provisions - Petition allowed by way of remand. The Court considered a petition challenging an order passed by the respondent under the Central Goods and Services Tax Act, 2017. The petitioner sought relief, including setting aside the order, quashing certain notifications, and any other relief deemed appropriate. The core issue was whether the petitioner should have first pursued the statutory remedy of appeal before the Appellate Authority before approaching the Court under Article 226 of the Constitution of India.The Court noted that under Section 75(4) of the Act, an opportunity of hearing must be granted before an adverse decision is made. The petitioner argued that they were not provided with an opportunity to respond to the proposed order before it was passed. The respondents contended that a show cause notice had been issued and that the petitioner had been given a personal hearing, which was recorded in the order.Upon review, the Court found that there was no evidence that the petitioner had been given an opportunity to respond specifically to the adverse order in question. While the respondents claimed that show cause notices had been issued, the Court observed that the order did not reference the issuance of such notices or the petitioner's explanation in relation to the adverse order. The Court concluded that the impugned order was in violation of the principles of natural justice as outlined in Section 75(4) of the Act.As a result, the Court set aside the impugned order and remanded the matter to the concerned authority for further proceedings in accordance with the law. The Court directed that the authority should complete the proceedings within six months from the date of the order.In summary, the Court allowed the petition in part, emphasizing the importance of adhering to the principles of natural justice and providing a fair opportunity for affected parties to respond before adverse orders are passed.