2026 (2) TMI 1392 - HC - GST

Requirement of Particulars: absence of particulars, reasons or hearing invalidates GST adjudication and ledger debit.

The article addresses validity of a GST show cause notice and related adjudication orders where the notice lacked requisite particulars, the adjudication ... Notice to show cause must contain relevant particulars - principles of natural justice - unreasoned adjudication order violates Section 75(6) - adjudication without hearing violates Section 75(4) - orders passed without jurisdiction / functus officio - setting aside of adjudication orders - remand for fresh consideration after provision of particulars - reversal and recredit of electronic ledger debits - HELD THAT:- The notice to show cause is clearly bereft of particulars. It has been time and again held by the Hon’ble Supreme Court that all relevant particulars must be set out in the notice to show cause to enable the noticee to answer the charges levelled against the noticee. Not having done so, the respondent GST Authority has acted in breach of the principles of natural justice. It is not in dispute that the said order which clearly visits the petitioner with adverse consequences has been passed without hearing the petitioners which is a clear violation of the provisions of Section 75(4) of the said Act of 2017 apart from the violation of principles of natural justice even in usual course. On that ground too the adjudication order cannot withstand scrutiny under judicial review. The second repetition of the same adjudication order on June 05, 2023 was clearly without authority. Similarly the order dated June 09, 2023 communicating acceptance of the petitioner’s reply could also not have been issued by the Proper Officer concerned at all inasmuch as the Proper Officer became functus officio after having passed the adjudication order dated May 29, 2023. Both the said order are without jurisdiction. Both the adjudication orders i.e. the order dated May 29, 2023 and June 05, 2023 passed by the adjudicating authority, which are impugned in the present writ petition as well as the order dated June 09, 2023 deserve to be set aside and are accordingly set aside. As already indicated hereinabove, since the notice to show cause does not contain the relevant particulars, the notice issuing authority shall provide all relevant particulars to the petitioners in support of the show cause notice dated February 21, 2023 and the petitioners shall be entitled to file reply thereto in accordance with law. Since a sum of Rs. 2,51,858/- has been debited from the petitioners’ electronic credit ledger on the basis of the adjudication order dated June 5, 2023, which has no basis in law, in terms of the respondents own report in the form of an affidavit, therefore the debiting of electronic cash ledger of the petitioner on the strength of such order cannot also be held to be valid. Accordingly it is directed that the respondent GST authorities shall reverse the debits and recredit the amount debited from the petitioner’s electronic cash ledger on the strength of the order dated June 05, 2023 within a period of two weeks from the date of communication of this order. Issues: (i) Whether the notice to show cause dated February 21, 2023 and the adjudication orders dated May 29, 2023 and June 05, 2023 are valid where the notice and orders lack relevant particulars, reasoning and opportunity of hearing; (ii) Whether the subsequent order dated June 09, 2023 communicating acceptance of the petitioner's reply and the debit of Rs. 2,51,858/- from the petitioner's electronic credit ledger are legally sustainable.Issue (i): Validity of the show cause notice and adjudication orders dated May 29, 2023 and June 05, 2023 given absence of particulars, absence of reasons and absence of opportunity of hearing.Analysis: The impugned notice to show cause did not set out requisite particulars necessary to enable a meaningful reply. The adjudication order dated May 29, 2023 was unreasoned and did not set out facts or basis for the conclusion, and the orders were passed without affording an opportunity of hearing as envisaged by the statutory scheme. The subsequent re-uploading of the same adjudication order on June 05, 2023 replicated the same defects. The combination of omission of particulars in the notice, absence of reasons in the adjudication order and failure to afford hearing engages the statutory provisions requiring reasoned adjudication and procedural fairness under the Act.Conclusion: The notice to show cause and the adjudication orders dated May 29, 2023 and June 05, 2023 are set aside as invalid. This conclusion is in favour of the assessee.Issue (ii): Validity of the order dated June 09, 2023 communicating acceptance of the petitioners' reply and the consequential debit of Rs. 2,51,858/- from the petitioners' electronic credit ledger.Analysis: The order dated June 09, 2023 could not validly be issued after the adjudicating officer had become functus officio by passing the May 29, 2023 adjudication order; accordingly that communication is without jurisdiction. The debit of Rs. 2,51,858/- arose from the invalid adjudication order and, per the respondents' own affidavit admitting inadvertent uploading, lacks legal basis. Equity and statutory consistency require reversal of an unauthorized debit to the electronic credit ledger and recredit of the same amount.Conclusion: The order dated June 09, 2023 is without jurisdiction and the debit of Rs. 2,51,858/- is invalid; the revenue is directed to reverse and recredit the debited amount. This conclusion is in favour of the assessee.Final Conclusion: The writ petition is allowed by setting aside the adjudication orders dated May 29, 2023 and June 05, 2023 and the order dated June 09, 2023; the notice-issuing authority must provide all relevant particulars supporting the show cause notice dated February 21, 2023 and permit the petitioners to file a fresh reply; the respondent GST authorities shall reverse and recredit the amount debited from the petitioners' electronic credit ledger within two weeks of communication of this order.Ratio Decidendi: A show cause notice under the Goods and Services Tax scheme must set out relevant particulars and an adjudication order imposing tax must be reasoned and preceded by opportunity of hearing; orders issued without such particulars, reasons or hearing, and any consequential unauthorized debit to electronic ledgers, are invalid and must be set aside with restoration of the affected amounts.