GST Demand Order Set Aside for Denial of Personal Hearing; Violation of Natural Justice

Issue: Whether a GST demand order is valid when the adjudicating authority failed to consider the assessee’s request for a personal hearing.

Facts:

The assessee challenged a demand order, arguing that their request for a personal hearing was not considered.
The assessee had filed returns and paid appropriate taxes for the period 2019-20.
Discrepancies were noticed, and a show cause notice was issued.
The assessee filed a reply seeking time to furnish more documents and requested a personal hearing.
The impugned order was passed without considering the request for a personal hearing.

Decision:

The court held that the impugned order was to be set aside.
The failure to consider the assessee’s request for a personal hearing violated the principles of natural justice.

Key Takeaways:

This case emphasizes the importance of providing a personal hearing when requested by the assessee, as it is a fundamental aspect of natural justice.
The denial of a personal hearing can invalidate a demand order.
The court’s decision ensures that assessees are given a fair opportunity to present their case and address any discrepancies before a final order is passed.
This ruling underscores the need for adjudicating authorities to adhere to procedural fairness and consider all requests made by the assessee.

HIGH COURT OF MADRAS

JC Valvulas India (P.) Ltd.

Commercial Tax Officer

Mohammed Shaffiq, J.

W.P.No.35349 of 2024
W.M.P.No.38244 and 38246 of 2024

NOVEMBER 29, 2024

S. Karunamoorthy for the Petitioner. Ms. Amrita Dinakaran, Govt. Adv. for the Respondent.

ORDER

1. The present Writ Petition is filed challenging the impugned order passed by the respondent dated 24.08.2024 relating to the assessment year 2019-20, on the short ground that the petitioner’s request for a personal hearing vide reply dated 11.07.2024 was not even considered.

2. The petitioner is engaged in the business of manufacturing and supply of valves. The petitioner is a registered dealer under Goods and Services Act, 2017. During the relevant period, the petitioner had filed its return and paid appropriate taxes. However, on examination of the information furnished in the returns under various heads, the following discrepancies inter alia were noticed:

(i)

Input tax credit to be reversed on non-business transactions and exempt supplies

(ii)

Under declaration of ineligible input tax credit

(iii)

Input tax credit claimed from cancelled dealers, return defaulters and tax non payers.

3. It is submitted by the learned counsel for the petitioner that a show cause notice was issued in GST DRC 01 to the petitioner on 28.05.2024. In response to the same, the petitioner filed its reply dated 11.07.2024 seeking time to furnish some more documents and also requested for personal hearing. The impugned order came to be passed, without considering the request for personal hearing, it was thus submitted that the impugned order suffers from violation of principles of natural justice and is also contrary to the mandate contained in Section 75(4) of the Act.

4. The learned Government Advocate for the respondent would submit that the petitioner’s would be granted an opportunity of personal hearing and the petitioner may submit all the documents, during the course of personal hearing.

5. In view thereof, the impugned order dated 24.08.2024 is set aside. It is open to the petitioner to submit documents/additional objections/reply, if any, to the respondents and the respondents would proceed with the matter after affording the petitioner an opportunity of personal hearing.

6. Accordingly, the Writ Petition stands disposed of. There shall be no order as to costs. Consequently, connected miscellaneous petitions are closed.