2025 (10) TMI 912 - HC - GST

Petition dismissed for no denial of natural justice; three personal-hearing notices unused; appeal under Section 107(1)/(4) subject to pre-deposit

HC dismissed the petition, holding there was no denial of natural justice in the adjudication under the TGST Act. The court found three personal-hearing ... Violation of principles of natural justice - relied upon documents (RUD) seized during inspection were not supplied by the adjudicating officer before arriving at a decision - denial of proper opportunity of hearing - petitioner made a request for an adjournment, the request was not heeded to and instead, the order-in-original was passed - HELD THAT:- The petitioner has been granted three opportunities of personal hearing as required under the provisions of Section 75(5) of the TGST Act. It, however, neither availed the notice of personal hearing nor filed its reply to the revised show cause notice despite service of hundreds of documents relating to the financial year 2021-2022. The petitioner, in the writ petition, prays that this Court should examine as to whether the supply of documents numbering in hundreds cover the subject period 2021-2022 and whether some of the documents on the basis of which the findings of the adjudicating officer are based, were not served upon it. This at best could be a facet of principles of natural justice which ground is open for the petitioner to take before the appellate authority as per the provisions of Section 107 of the TGST Act. The petitioner has also alleged that the opportunity of personal hearing was not granted. However, it appears that despite issuance of three personal hearing notices, the petitioner has failed to avail the same and then on the date on which the order-in-original was passed, it has made a belated request to seek adjournment and file reply. It is unable to accede to the submission of the learned counsel for the petitioner that the adjudicating officer has, without granting adequate opportunity of personal hearing to the petitioner and without supplying the relevant relied upon documents, passed the impugned order-in-original. The petitioner is at liberty to approach the appellate authority with statutory pre-deposit as per the provisions of Section 107(1) read with sub-section (4) of the TGST Act - the observations are limited to examine whether the petitioner has been denied principles of natural justice or the adjudicating officer has failed to follow the procedure prescribed under the Act while passing the impugned order-in-original. It is not required to enter into the merits of the case of the parties. Petition dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether the adjudicating officer violated principles of natural justice by failing to supply relied upon seized documents and by refusing adjournment, contrary to Section 75(5) of the TGST Act, 2017, thereby rendering the order-in-original liable to be set aside. 2. Whether the writ jurisdiction is appropriate to adjudicate disputed questions of fact and evidence in tax proceedings where an alternative statutory remedy of appeal exists under Section 107 of the TGST Act. 3. Whether the earlier Division Bench decision relied upon by the petitioner (relating to a VAT penalty) is binding or distinguishable on the facts of present proceedings. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Natural justice: supply of documents and grant of hearing (Section 75(5) TGST Act) Legal framework: Section 75(5) of the TGST Act requires that the person affected be given an opportunity of being heard before passing an adjudication order. Principles of natural justice mandate supply of documents relied upon and adequate opportunity to file replies and seek adjournments. Precedent treatment: The Court acknowledged authorities emphasising necessity of hearing and supply of relied documents; the petitioner relied on a Division Bench VAT decision where an order was passed before expiry of time allowed for objections and was set aside. The State relied on Apex Court precedent that writ courts should be slow to entertain factual disputes when statutory appeal exists. Interpretation and reasoning: The Court examined the factual chronology: multiple scanned copies and hard copies were supplied and acknowledged; 2434 photocopies and RFID tracking and soft copies were handed over on 29.05.2025; multiple notices for personal hearing were issued (02.06.2025, 21.06.2025, 25.06.2025); the petitioner attended a personal hearing on 26.05.2025, sought certified copies and later repeatedly claimed illegibility without specifying missing documents; on the date fixed (02.07.2025) the petitioner belatedly sought a 15-day adjournment. The adjudicating officer concluded that sufficient opportunity had been afforded and the petitioner was not interested in filing a reply. The Court confined itself to whether procedure and natural justice were observed and found the record showed multiple opportunities and actual supply of documents; the petitioner failed to specify which documents were missing or illegible and failed to utilize offered dates to collect materials. Ratio vs. Obiter: Ratio - where the record discloses supply of relied documents (scanned/hard copies), multiple personal hearing notices and opportunities to collect documents, a later belated request for adjournment does not by itself demonstrate denial of principles of natural justice. Obiter - observations regarding clarity of individual documents and the department's attempts to provide certified serial-numbered copies beyond what was strictly necessary to decide procedural adequacy. Conclusion: No violation of Section 75(5) or principles of natural justice is established on the record; the adjudicating officer did not improperly deny hearing or fail to supply relied upon documents in a manner warranting interference by writ jurisdiction. Issue 2 - Appropriateness of writ jurisdiction versus alternative remedy (Section 107 TGST Act) Legal framework: The TGST Act provides an appellate remedy under Section 107 with statutory pre-deposit requirements; constitutional writ jurisdiction is limited where an alternative efficacious statutory remedy exists, especially in revenue/financial matters and disputed questions of fact. Precedent treatment: The Court relied upon the consistent view of the Apex Court (cited) that writ courts should refrain from entering into disputed factual questions when the statute supplies an alternative remedy; this principle was invoked by the State as a basis to decline writ interference. Interpretation and reasoning: Having examined whether there was a jurisdictional error or breach of natural justice (and finding none), the Court considered the petitioner's factual challenges (alleged illegible/missing documents; motivation of proceedings; merits of ITC disallowance). Those constitute disputed factual and evidentiary contentions amenable to the appellate process. Given the availability of appeal under Section 107(1) read with sub-section (4) (including statutory pre-deposit), and the absence of jurisdictional infirmity, the Court held the writ remedy inappropriate for resolution of these factual disputes. Ratio vs. Obiter: Ratio - where statutory appellate remedy exists and no jurisdictional or fundamental right violation is shown, writ jurisdiction will not be exercised to reappraise factual and evidentiary matters in tax adjudication. Obiter - procedural guidance that the appellate authority is free to consider grounds raised in appeal in accordance with law and to examine natural justice facets on record. Conclusion: The writ petition is not maintainable on disputed factual issues; the petitioner is relegated to the statutory appellate remedy with requisite pre-deposit under Section 107. Issue 3 - Distinguishability of prior VAT decision relied upon by petitioner Legal framework: Precedent is to be applied with regard to its factual matrix; decisions under different statutes (VAT Act) are persuasive only to the extent their facts align with present statutory and procedural circumstances. Precedent treatment: The petitioner relied on a Division Bench VAT order where a penalty order was passed before the time within which objections could be filed had expired; that order was set aside for denial of opportunity. Interpretation and reasoning: The Court contrasted facts: in the cited VAT matter only one hearing opportunity had been provided and the impugned order was passed before expiry of the objection period. In the present case multiple hearings were scheduled, extensive production and acknowledgement of documents occurred, and the adjudicating officer afforded repeated chances to collect materials. Hence the VAT decision is distinguishable on facts and does not mandate interference. Ratio vs. Obiter: Ratio - a precedent is distinguishable where the procedural circumstances demonstrating denial of hearing in that precedent are absent in the present record. Obiter - remark that distinction is grounded on factual differences rather than any lesser force of the VAT decision. Conclusion: The prior VAT decision is distinguishable and does not support setting aside the impugned order on the present record. Ancillary procedural conclusions 1. The Court limited its examination to whether principles of natural justice and prescribed procedure under the Act were followed and expressly refrained from entering into merits of ITC disallowance or findings of fraudulent availment; such substantive matters are for the appellate authority. 2. The writ petition is dismissed with liberty to pursue appeal under Section 107 subject to statutory pre-deposit; no order as to costs.