Show-cause notice review is limited to patent illegality, but adjudication fails without the mandatory personal hearing.
A show-cause notice under the West Bengal GST regime was upheld because interference at the notice stage is justified only for patent illegality or lack of jurisdiction, and the authority had recorded a prima facie basis for disputed input tax credit involving cancelled registrations and suspected circular passing of credit. The writ challenge failed on that point. The subsequent adjudication order was set aside, however, because it was passed without affording the required personal hearing, in breach of the statutory scheme and natural justice. The matter was remitted for fresh adjudication after notice, reply, and hearing before the proper officer.
Issues: (i) whether the show-cause notice issued under the West Bengal Goods and Services Tax Act, 2017 was liable to be interfered with on the ground of premeditation, lack of jurisdiction, or absence of a prima facie basis; (ii) whether the adjudication order could be sustained when passed without affording personal hearing and in breach of natural justice.
Issue (i): Whether the show-cause notice issued under the West Bengal Goods and Services Tax Act, 2017 was liable to be interfered with on the ground of premeditation, lack of jurisdiction, or absence of a prima facie basis.
Analysis: Interference at the stage of a show-cause notice is warranted only where the notice is shown to be wholly without jurisdiction or patently illegal. The notice in question recorded a prima facie case that input tax credit had been wrongly availed on the basis of a supplier chain suggesting cancelled registrations, circular passing of credit, and possible collusion. The Court held that the authority had not reached a final determination but had only formed a prima facie view after considering the reply to the pre-notice intimation. The petitioner's reliance on invoices, e-way bills and other documents was held insufficient to justify quashing the notice at that stage, especially when the genuineness of the transactions was in dispute and the burden of proving eligibility to input tax credit lay on the claimant.
Conclusion: The show-cause notice was upheld and no interference was called for.
Issue (ii): Whether the adjudication order could be sustained when passed without affording personal hearing and in breach of natural justice.
Analysis: The adjudication order was passed during pendency of the writ petition without granting an opportunity of personal hearing. Such omission was held to violate the mandatory requirement of personal hearing under the statutory scheme and the principles of natural justice. The defect went to the root of the adjudication and rendered the order unsustainable.
Conclusion: The adjudication order was set aside and the matter was remitted for fresh consideration after giving the petitioner an opportunity to reply and be heard.
Final Conclusion: The challenge to the show-cause notice failed, but the subsequent adjudication was invalidated for breach of hearing requirements, leaving the proceedings to continue afresh before the proper officer in accordance with law.
Ratio Decidendi: A show-cause notice may be interfered with only in cases of patent illegality or absence of jurisdiction, while an adjudication order affecting civil consequences cannot stand if passed without the hearing mandated by statute and natural justice.
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