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2023 (11) TMI 1220 - HC - GSTViolation of principles of natural justice - initiation of proceeding under Section 73 of the OGST CGST Act - notice under Section 61 of the CGST/OGST Act has been issued - no opportunity of hearing was given to the petitioner - HELD THAT - It is provided under Section 61(3) of the CGST/OGST Act that in case no satisfactory explanation is furnished within a period of thirty days of being informed by the proper officer or such further period as may be permitted by him or where the registered person, after accepting the discrepancies, fails to take the corrective measure in his return for the month in which the discrepancy is accepted, the proper officer may initiate appropriate action including those under Section 65 or Section 66 or Section 67, or proceed to determine the tax and other dues under Section 73 or Section 74. In the present case, the authority chose to initiate action under Section 73. Therefore, she was required to adhere to the modality contained in said Section 73 read with Rule 142. The notice issued intimating discrepancy in the returns under Section 61 of the CGST/OGST Act dated 26.10.2022 under Annexure-2 and the order dated 31.01.2023 passed under Section 73 of the Act vide Annexure-1 cannot be sustained in the eye of law and the same are liable to be quashed and are hereby quashed - The matter is remanded to the Assessing Authority to proceed de novo from the stage of issuance of notice intimating the discrepancy in returns after scrutiny under Section 61 of the CGST/OGST Act by affording due opportunity of hearing to the petitioner. Petition disposed off by way of remand.
Issues Involved:
1. Validity of ex-parte order under Section 73 of the CGST/OGST Act. 2. Compliance with the principles of natural justice. 3. Application of Reverse Charge Mechanism. 4. Requirement of personal hearing before passing an adverse order. 5. Adherence to statutory provisions under Section 61 and Section 73 of the CGST/OGST Act. Summary: 1. Validity of Ex-Parte Order: The petitioner sought to quash the ex-parte order dated 31.01.2023 under Section 73 of the CGST/OGST Act, which directed payment of tax, interest, and penalty within three months, failing which recovery proceedings would be initiated as per Section 79 of the Act. 2. Compliance with Principles of Natural Justice: The petitioner argued that the order was passed without verifying records or applying due diligence, and in gross violation of the principles of natural justice. The order was issued without affording a personal hearing, which is mandatory under Section 75(4) of the GST Act, 2017. 3. Application of Reverse Charge Mechanism: The petitioner contended that the tax liability was incorrectly imposed on them despite the fact that Rungta Mines Limited, the receiver of the service, had already paid the CGST/OGST under the Reverse Charge Mechanism as notified by the Central Government. 4. Requirement of Personal Hearing: The court noted that the notice dated 26.10.2022 in Form GST ASMT-10 marked the sections for personal hearing as "NA," indicating no opportunity for personal hearing was given to the petitioner. The court emphasized that personal hearing is mandatory before passing an adverse order, as held in various judgments, including Assistant Commissioner of State Tax v. M/s Commercial Steel Limited and M/s. Godrej Sara Lee Ltd. 5. Adherence to Statutory Provisions: The court observed that the authority did not comply with the statutory provisions under Section 61 and Section 73 of the CGST/OGST Act. The notice issued under Section 61 did not provide for a personal hearing, and the subsequent order under Section 73 was passed without adhering to the principles of natural justice. Conclusion: The court quashed the notice dated 26.10.2022 and the order dated 31.01.2023, remanding the matter to the Assessing Authority to proceed de novo from the stage of issuance of notice under Section 61, ensuring due opportunity of hearing to the petitioner. The writ petition was disposed of without any order as to costs.
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