GST Demand Order Set Aside: Denial of Access to Employee statements Requires Fresh Adjudication
Summary in Key Points:
- Issue: Was the impugned order valid when it failed to consider the assessee’s grounds, denied access to employee statements, and relied heavily on another order without confronting the assessee with it?
- Facts: The petitioner-assessee challenged the order, arguing that several grounds were not considered, their request for employee statements recorded under Section 70 was denied, and the order reproduced content from another order without showing it to the assessee. The revenue argued that the similar reasoning was acceptable due to standard agreements.
- Decision: Citing CBIC Circular No. 230/24/2024-GST, the court remanded the matter for fresh adjudication. The respondent authority was directed to provide all parties with a hearing opportunity and consider the materials they produce.
Important Note: This decision emphasizes the importance of adhering to principles of natural justice in adjudication proceedings. Failing to consider the assessee’s arguments, denying access to relevant documents (employee statements), and relying on another order without giving the assessee a chance to respond are all serious procedural flaws. The remand, guided by the CBIC circular, ensures a fairer process where all parties are heard and the decision is based on a thorough consideration of all relevant evidence and arguments.
HIGH COURT OF BOMBAY
Mediacom Communications (P.) Ltd.
v.
Union of India
M.S. Sonak and Jitendra Jain, JJ.
WRIT PETITION NO.4246 OF 2024
DECEMBER 11, 2024
Rohan P. Shah, Sr. Adv., Sudipta Bhattacharjee, Ms. Anishkta Gupta, Mohammed Anajwalla and Chayank Bohra, Advs. for the Petitioner. Jitendra Mishra, Ram Ochani, Ms. Jyoti Chavan, Addl. G.P. and Suraj Gupte, AGP for the Respondent.
ORDER
M.S. Sonak, J.- Heard learned counsel for the parties.
2. Rule. The rule is made returnable immediately at the request and with the consent of the learned counsel for the parties.
3. The petitioner challenges the Order-in-Original dated 30 April 2024. Though an appeal lies against this order, considering the order already made by us on 20 June 2024 in Writ Petition No.6181 of 2024 and CBIC Circular No.230/24/2024-GST dated 10 September 2024, we propose to remand the matter to 3rd respondent for fresh adjudication of the show cause notice issued to the petitioner. Accordingly, there is no point in relegating the petitioner to the alternate remedy.
4. Mr. Rohan Shah learned Senior Advocate for the petitioner, has submitted that several grounds were raised on behalf of the petitioner. Still, most of those grounds and submissions in support thereof have not been considered by the 3rd respondent when making the impugned order. He submitted that the impugned order relies upon and almost verbatim reproduces the contents of another order dated 11 August 2022 made by the Deputy Commissioner, East-II Division, CGST, Gurugram. On instructions, he submitted that the petitioner was not even confronted with this order and was given an opportunity to make their submissions.
5. Ms. Chavan learned Additional Government Pleader contests the above contentions and submits that because the agreements were standard, there is nothing wrong with the same reasonings.
6. At this stage, we are not deciding the rival contentions on merits. However, noting our order dated 20 June 2024 in Writ Petition No.6181 of 2024, we think that we should also adopt the same course and set aside the impugned order and remand the matter to the 3 rd respondent for reconsideration of the entire matter afresh by providing full opportunity of hearing to all the parties.
7. Another reason for adopting the above course of action is the CBIC Circular dated 10 September 2024, which, according to Mr Shah, will also impact the proceedings in the show cause notice, and the same was not available while passing the Order-in-Original.
8. Ms. Chavan has her interpretation of the Circular. But, as we clarified, we are not considering rival contentions or interpretations at this stage. Suffice to state that the petitioner should have an opportunity to place the Circular dated 10 September 2024 before the 3rd respondent and persuade him regarding its applicability. A similar opportunity will also be available to the respondents to contend otherwise.
9. Mr. Shah submits that the petitioner has requested the concerned respondent to furnish copies of the statements of employees recorded under Section 70 of the SGST Act to respond to show cause in the proceedings effectively.
10. Ms. Chavan, on instructions, states that such statements will be provided to the petitioner within two weeks of uploading this order.
11. Ms. Chavan states that the respondents also require certain agreements, invoices and payment details from the petitioner. She states that a list would be furnished to the petitioner within two weeks of uploading this order. Mr. Shah states that the petitioner will supply the necessary details as may be sought within two weeks of receiving such intimation.
12. The above statements made by the respective counsel are recorded and accepted.
13. The impugned order dated 30 April 2024 is quashed and set aside. The matter is remanded to the 3 rd respondent for fresh consideration. The 3rd respondent should give all parties the opportunity to hear and consider the materials they produced in the proceedings. The 3 rd respondent will decide the matter as expeditiously as possible by passing a reasoned order.
14. All parties’ contentions on merits are explicitly left open as this Court has not examined such rival contentions.
15. The rule is made absolute in the above terms without any cost order. All concerned to act on the authenticated copy of this order.