HC Finds No Breach of Natural Justice, Relegates Assessee to Appeal.

ORDER

1. Learned counsel Sri Karthik Ramana Puttamreddy appears for the petitioner.

Sri Swaroop Oorilla, learned Special Government Pleader for State Tax, appears for respondent Nos.1 to 3.

Sri K. Sanjeev, learned Standing Counsel for Central Government, appears for Union of India.

2. Heard the learned counsel for the parties.

3. The impugned order-in-original dated 02.07.2025 passed under Section 74 of the Telangana Goods and Services Tax Act, 2017 (hereinafter referred to as, “the TGST Act”), relates to the financial year 2021-2022. The petitioner, being aggrieved, has preferred the writ petition, inter alia, taking the ground that the relied upon documents seized during inspection were not supplied by the adjudicating officer before arriving at a decision. The petitioner was denied proper opportunity of hearing. When the petitioner made a request for an adjournment, the request was not heeded to and instead, the order-in-original was passed.

4. In support of the aforesaid submission, learned counsel for the petitioner relied upon a decision of the Division Bench of the erstwhile High Court of Andhra Pradesh in W.P.No.24954 of 2015, dated 11.08.2015, relating to a penalty order passed under the Andhra Pradesh Value Added Tax Act, 2005. He submits that on the very date on which the request for adjournment was made, the adjudicating officer ought not to have passed the final order, without giving an adequate opportunity of hearing in the teeth of the provisions of Section 75(5) of the TGST Act.

5. Learned counsel for the petitioner further submits that the seized documents were not duly provided to the petitioner in Form INS-02. Apart from the above, learned counsel for the petitioner has taken a number of other grounds assailing that the impugned proceedings are motivated and without proper application of mind, a huge liability has been imposed upon the petitioner.

6. Learned Special Government Pleader for State Tax has strongly countered the submissions of the learned counsel for the petitioner. He has submitted that the claim of non-supply of the relevant documents is untenable on facts, as a mere perusal of the impugned order would indicate that the documents which the petitioner alleges to have not been supplied relate to the invoices for the financial year 2017-2018, whereas the present proceedings relate to the financial year 2021-2022. He has also referred to the previous two rounds of litigation on the same subject period.

7. Our attention has been drawn to the findings recorded by the adjudicating officer at page Nos.120 to 125 of the material papers annexed to the writ petition. According to the learned Special Government Pleader for State Tax, they demonstrate that the petitioner in the first round of litigation approached this Court on the plea that the orders and show cause notices were unsigned. The matter was remitted to the adjudicating officer. Thereafter, the petitioner once again laid challenge to the impugned proceedings on the ground that the relied upon documents were not supplied. It is submitted that after the order dated 05.03.2025 passed in A S Metcorp Private Limite v. Deputy Commissioner, (ST) (FAC) [WRIT PETITION NOS: 17938 17941 & 18148 0F 2024, dated 5-3-2025], the adjudicating officer has supplied the scanned copies of several such documents for the financial year 2020-2021 i.e., 1810 scanned copies through e-mail dated_15.04.2025 at the time of issuance of DRC-01A dated 11.04.2025 and also made attempts to provide the hard copies, which were denied. The scanned copies were again sent through email while DRC-01 was issued on 29.04.2025. The assessee was asked to depute a person to collect the supporting material and also get soft copies of the scanned documents. The taxpayer, however, did not file any submissions in Part-B of the DRC-01A. A revised show cause notice was thereafter issued under Section 74 of the TGST Act/Central Goods and Services Tax Act, 2017 read with Section 20 of the Integrated Goods and Services Tax Act, 2017, in Form DRC-01 on 29.04.2025 without prejudice to any other action that may be initiated under the TGST Act. It is submitted that the petitioner through its Advocate attended personal hearing before the adjudicating officer on 26.05.2025 and requested to provide the certified copies with serial numbers. Hence, 2434 photocopies of seized documents and 363 RadioFrequency Identification (RFID) data tracking were provided by the department along with the soft copy in a pen drive and covering letter handed over on 29.05.2025 duly acknowledged by the petitioner’s representative. Even then, the petitioner kept on persisting that the documents were not clear or legible. The assessee, however, neither clearly specified the documents which were missing nor specified the documents which were illegible. The petitioner was granted multiple opportunities to visit the office on scheduled dates i.e., 12.06.2025, 16.06.2025, 18.06.2025 and 20.06.2025 at 11.30 am to collect the required documents, but it failed to visit. The adjudicating officer issued three reminders on 02.06.2025, 21.06.2025 and 25.06.2025 to avail the personal hearing and to file reply. Even after receipt of 2434 documents along with DRC-01A and the revised show cause notice in addition to providing the photocopies of all the documents on 29.05.2025, the petitioner did not file any reply to the revised show cause notice and did not respond till date. Then on 02.07.2025, the date of personal hearing, it made a request at 1.12 pm to consider the adjournment of 15 days for the scheduled personal hearing and also for submission of the objections to the revised show cause notice. The assessee also claimed that 60 days time has to be granted from the date of supply of all the documents relied upon to furnish reply to the show cause notice. However, the adjudicating officer was of the opinion that sufficient time and opportunities have been provided to the taxpayer who has failed to submit its reply. Therefore, after examining the correspondence and the period already consumed, the adjudicating officer came to the conclusion that the assessee is not interested in submitting the reply, despite huge number of opportunities. It is submitted that the assessee has claimed Input Tax Credit (ITC) without physical inward supply tax invoices, registers, using of irrelevant vehicles as per e-way bills, non-submission of information/ documents in spite of multiple notices. Therefore, the ITC was proposed to be disallowed to a tune of Rs.50,69,735/-of CGST, a similar amount of TGST and IGST of Rs.1,40,31,290/-.

8. Learned Special Government Pleader for State Tax has referred to the other findings of the adjudicating officer which according to him demonstrate fraudulent availment of ITC without making supplies. He submits that the petitioner has an alternative remedy of appeal under Section 107 of the TGST Act. He relies upon the decision of the Apex Court in State of Madhya Pradesh v. Commercial Engineers and Body Building Co. Ltd.(SC)/Civil Appeal No.7170 of 2022 dated 14.10.2022.

9. Based on the aforesaid submissions, learned Special Government Pleader for State Tax has prayed that the writ petition may be dismissed and the petitioner may be relegated to avail the alternative remedy of appeal.

10. We have given considerable hearing to the learned counsel for the parties and perused the relevant documents placed from record.

11. The previous history of the litigation has been referred to in the foregoing paragraphs. It appears that after the matter was remitted vide order dated 05.03.2025 passed in A S Metcorp Private Limite (supra), the department has provided scanned copies of several documents which relate to the financial year 2021-2022, which were acknowledged by the petitioner. However, it kept on persisting that the documents were either illegible or were missing without specifying as to which documents were missing. It further appears that multiple reminders were issued for personal hearing, such as on 02.06.2025, 21.06.2025 and 25.06.2025, whereafter the matter was fixed on 02.07.2025 when the petitioner made a prayer for 15 days adjournment for personal hearing and also for submission of its objections to the revised show cause notice. This, however, was declined since according to the adjudicating officer, sufficient opportunities have already been granted.

12. The conspectus of facts and the chronology of events, which have been noted above, show 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, in our opinion, 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.

13. We have taken note of the decision of the Division Bench of the erstwhile High Court of Andhra Pradesh in W.P.No.24954 of 2015, dated 11.08.2015. A perusal of the said order shows that it relates to the Andhra Pradesh Value Added Tax Act, 2005, in which only one opportunity of hearing was granted to the petitioner therein. The petitioner therein had time to file the objections up to 05.07.2015, but the order impugned therein was passed on 02.07.2015 itself. In those circumstances, the order of penalty impugned therein was set aside. The aforesaid decision is therefore distinguishable on facts.

14. Having taken note of the aforesaid facts and circumstances, we are 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. Needless to say that the writ proceedings are entertainable on grounds of error of jurisdiction or violation of principles of natural justice or if there is a violation of fundamental rights. In such financial matters, it is the consistent view of the Apex Court, as also held in Commercial Engineers and Body Building Co. Ltd. (supra), relied upon by the learned Special Government Pleader for State Tax that when the taxing statute provides for an alternative remedy for resolution of dispute, the writ court would be loath to enter into such disputed questions of fact which can adequately be raised before the appellate authority. In such circumstances, we are not inclined to interfere with the matter.

15. 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.

16. Let it be made clear that the observations made hereinabove 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. We have not entered into the merits of the case of the parties. The appellate authority would be free to consider the grounds raised in appeal in accordance with law.

17. The writ petition is accordingly dismissed. However, there shall be no order as to costs.

18. Miscellaneous applications pending, if any, shall stand closed.