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of <h1>Natural justice breach in appellate enhancement of penalty leads to set-aside and remand for fresh hearing on merits</h1> Appellate enhancement of penalty without affording the appellants a fresh opportunity to be heard breached principles of natural justice; the appellate ... Violation of principles of natural justice - Dismissal of petitioners’ appeal ex-parte - enhancement of penalty without granting the petitioners a fresh opportunity to be heard - HELD THAT:- It is evident that the appellate authority has not passed the order impugned on any date proximate to the date which was fixed for hearing upon granting adjournment to the petitioner - From the supplementary affidavit and the documents annexed thereto it is evident that the tax consultant of the petitioners has been under medical supervision for prostate ailments and had also been admitted to the hospital for a few days in the beginning of the year 2023. In such view of the matter, it may not be unreasonable to believe that such person missed to attend the appeal hearing fixed on October 05, 2023. That apart, when the appellate authority has increased the quantum of penalty, it was incumbent on the appellate authority to afford the petitioners a reasonable opportunity of showing cause against the proposed enhancement of penalty. It might well have been so that if such notice was given, the petitioners might have appeared and the case may not have been required to be proceeded with ex-parte. However such notice has not been given, in the case at hand. It is indeed a violation of the provisions of the first proviso to section 107(11) of the said Act of 2017. The principles of natural justice do not appear to have been fairly complied with in the case at hand. Only on such score, the appellate order dated May 9, 2024 impugned herein stands set aside - matter is remanded to the file of the appellate authority for a fresh decision on merits. Petition disposed off by way of remand. Issues: Whether the appellate authority's ex-parte dismissal of the appeal and enhancement of penalty without granting the petitioners a fresh opportunity to be heard (contrary to the first proviso to section 107(11) of the relevant GST enactments) violated principles of natural justice and required setting aside and remand for fresh decision.Analysis: The appellate order was not passed on a date proximate to the adjourned hearing date; there was a significant delay between the adjourned hearing and the ex-parte order. Documentary evidence showed that the petitioners' authorized representative/tax consultant was under medical supervision and was indisposed around the relevant time, providing a plausible explanation for non-appearance. The appellate authority increased the penalty amount without affording the petitioners a specific opportunity to show cause against enhancement. Such procedure failed to accord a reasonable opportunity of hearing as required by the first proviso to section 107(11) and thereby amounted to non-compliance with principles of natural justice.Conclusion: The appellate order dated May 9, 2024 is set aside on the ground of violation of principles of natural justice and non-compliance with the first proviso to section 107(11); the matter is remanded to the appellate authority for fresh decision on merits, with liberty to the petitioners to file additional reply to be considered on hearing.
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