2025 (10) TMI 1173 - HC - GST

Assessment under Section 73 TNGST/CGST quashed for breach of natural justice; matter remitted for fresh merits decision

HC held the assessment order under s.73 TNGST/CGST for 2020-21 was passed in breach of natural justice because only Form GST ASMT-10 and DRC-01A notices ... Challenge to order passed u/s 73 of the TNGST and CGST Acts, 2017 for the tax period 2020-2021 - Petitioner was issued only with notice in Form GST ASMT 10 and DRC 01A dated 16.10.2024, to which, the Petitioner has replied - copies of the notice in DRC 01 were not uploaded - violation of principles of natural justice - HELD THAT:- It is evident that the impugned order has been passed in violation of principles of natural justice as the Petitioner has replied on 10.12.2024 and 21.01.2025 in response to the notice in DRC 01A dated 16.10.2024. If the Petitioner has received the notice in DRC 01 dated 16.11.2024, the petitioner would have given a detailed reply to the same. Since the impugned order has been passed in violation of principles of natural justice, the impugned order is therefore liable to be quashed. Therefore, the case is remitted back to the Respondent to pass a fresh order on merits and in accordance with law as expeditiously as possible. Petition disposed off. ISSUES PRESENTED AND CONSIDERED 1. Whether the impugned adjudicatory order under Section 73 of the TNGST and CGST Acts, 2017 was passed in breach of the principles of natural justice by reason of non-availability/non-upload of the notice in DRC-01 and absence of personal hearing to the affected party. 2. Whether, if there is a breach of natural justice in the issuance/serving of the notice and conduct of proceedings, the appropriate remedy is to quash the impugned order and remit the matter for fresh adjudication, and on what terms. 3. Whether the Court should prescribe timelines and conditions (including filing of consolidated reply and requirement of personal hearing) for fresh adjudication, and what consequences should follow non-compliance by the affected party. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Breach of principles of natural justice arising from non-availability/non-upload of DRC-01 notice and absence of personal hearing Legal framework: Principles of natural justice require that an affected person be given adequate and timely notice of the case against them and a reasonable opportunity to be heard (including personal hearing where appropriate) before adverse orders are passed. Under the statutory scheme for assessment and adjudication under the TNGST and CGST Acts, notices in prescribed formats (e.g., DRC-01, DRC-01A, GST ASMT 10) are the mechanism by which the department communicates show-cause notices and other proceedings; fair opportunity to inspect and reply is integral to the process. Precedent Treatment: The judgment does not cite or apply any prior authorities. (No precedents were followed, distinguished or overruled in the decision.) Interpretation and reasoning: The Court examined the material on record and accepted the Petitioner's case that only a notice in Form GST ASMT 10 and DRC-01A dated 16.10.2024 were available on the web portal and that the DRC-01 dated 16.11.2024 referenced in the impugned order was not uploaded nor made available for the Petitioner to reply. The Petitioner produced screenshots and dashboard evidence showing non-availability of the DRC-01 dated 16.11.2024 and demonstrated that replies were filed on 10.12.2024 and 21.01.2025 in relation to the DRC-01A. The Respondent's contention that personal hearing notices had been issued as indicated in the impugned order was noted but was not found sufficient to cure the defect where the underlying notice relied upon by the adjudicator had not been made available to the Petitioner. Ratio vs. Obiter: The finding that the impugned order was passed in violation of natural justice because the Petitioner was not given an opportunity to address the DRC-01 dated 16.11.2024 (which was not uploaded) and was not afforded a personal hearing, is ratio decidendi. Observations concerning the manner in which web-portal evidence demonstrated non-upload and reliance on DRC-01A replies are part of the operative reasoning. Conclusion: The Court concluded that the impugned order suffered from violation of principles of natural justice and was therefore liable to be quashed. Issue 2 - Appropriateness of quashing the impugned order and remitting the matter for fresh adjudication Legal framework: Where an adjudicatory order is vitiated by breach of natural justice, the appropriate remedy is ordinarily to quash the order and remit the matter to the authority to decide afresh after complying with natural justice and statutory mandates. The authority must consider all relevant materials, allow the affected party to file replies to the show-cause notice relied upon, and provide hearing as required by law. Precedent Treatment: No specific authorities were cited. The Court applied established principles of remedial relief in administrative law without reference to prior cases. Interpretation and reasoning: Given the factual finding that the Petitioner had not had an opportunity to respond to the DRC-01 dated 16.11.2024 and was not called for a personal hearing, the Court determined that quashing the order and remitting for fresh decision was necessary to ensure adjudication on merits consistent with procedural fairness. The Court framed remedial directions to structure the fresh adjudication: treating the impugned order as an addendum to the show-cause notice, permitting the filing of a consolidated reply within a fixed period, and directing the Respondent to pass a fresh order after hearing the Petitioner. Ratio vs. Obiter: The direction to remit for fresh adjudication following quashing of an order tainted by denial of natural justice is ratio. Procedural details stipulated (time limits for filing consolidated reply; instruction that the respondent preferably decide within three months after hearing) form part of the operative order and constitute binding directions in the case (ratio), though the specific timelines reflect judicial case-management and can be treated as interlocutory directions tailored to the facts. Conclusion: The impugned order was quashed and the matter remitted to the Respondent for fresh adjudication on merits and in accordance with law after permitting the Petitioner to file a consolidated reply and after hearing. Issue 3 - Specification of timelines, conditions for fresh adjudication, and consequences of non-compliance Legal framework: Courts may, while quashing administrative orders, prescribe directions to ensure that the matter is adjudicated expeditiously and fairly on remand, including reasonable timeframes for compliance and consequences for failure to comply. Precedent Treatment: No precedents cited; the Court exercised judicial direction-making power in the exercise of writ jurisdiction. Interpretation and reasoning: To clinch meaningful relief and ensure an effective remedy, the Court directed the Petitioner to file a consolidated reply to the DRC-01 dated 16.11.2024 within thirty (30) days from receipt of the order, treating the impugned order as an addendum to the show-cause notice. The Respondent was directed, upon such compliance, to pass fresh orders on merits and in accordance with law preferably within three (3) months after hearing the Petitioner. The Court further provided that if the Petitioner failed to comply with the stipulated condition(s), the Respondent would be at liberty to proceed as if the writ petition had been dismissed in limine. Ratio vs. Obiter: The imposition of a limited deadline for filing a consolidated reply and the instruction to afford hearing prior to fresh adjudication are part of the operative relief (ratio). The discretionary preference for a three-month timeframe for the authority to decide, and the conditional consequence that the authority may proceed if the Petitioner does not comply, are practical directions in the exercise of the Court's remedial power; they constitute core parts of the final order in the case (ratio) though their applicability to other cases would be obiter beyond the present facts. Conclusion: The Court prescribed clear conditions and timelines for the remand process and provided a specific consequence for non-compliance by the Petitioner, thereby balancing the rights of the parties and the need for efficient resolution. Overall Disposition Because the adjudicatory order was found to have been passed in violation of principles of natural justice (non-availability of the contested DRC-01 notice and absence of personal hearing), the Court quashed the impugned order and remitted the matter for fresh adjudication on merits and in accordance with law, subject to the Petitioner filing a consolidated reply within thirty days and the Respondent thereafter deciding preferably within three months after affording hearing; failure by the Petitioner to comply permits the Respondent to proceed as if the writ petition were dismissed.