2020 (1) TMI 466 - HC - GST

Principles of natural justice - adjudication completed before scheduled date of hearing - GST liability - stock transfer - It is the case of the writ applicant that this being an intra state branch transfer (in the nature of transfer of goods from one Unit of a registered person to another), there was no obligation on the writ applicant to discharge any GST liability. HELD THAT - This is a case of gross violation of the principles of natural justice. When the writ-applicant was asked to remain present on 08.07.2019 for the purpose of personal hearing, we fail to understand how the adjudication could have been concluded and an order could have been passed on 02.07.2019 i.e. before the scheduled date of hearing. This is suggestive of the fact that the reply of the writ-applicant in writing dated 08.07.2019 was also not taken into consideration. We are only concerned with the manner in which the respondent no.2 has proceeded to pass the final order under Section 129(3) of the Act - There is no doubt in our mind that the writ-applicant was not given any opportunity of hearing before concluding the proceedings for the purpose of Section 129(3) of the Act. To put it in another words, the case on hand is one of violation of sub-clause 4 of Section 129 of the Act, 2017. It provides that no tax, interest or penalty shall be determined under sub-section 3 without giving a person concerned an opportunity of being heard. The opportunity which the statute is talking about has to be meaningful opportunity and not just an eye wash. Matter remitted to the respondent no.2 for fresh consideration of the entire issue after giving appropriate opportunity of hearing to the writ-applicant - application allowed by way of remand.

Summary

Issues:
Violation of principles of natural justice in passing the order under Section 129(3) of the Act without giving a meaningful opportunity of being heard.

Analysis:
The writ applicant, engaged in the business of manufacturing chemical products, filed a writ application under Article 226 of the Constitution of India seeking various reliefs. The case arose when a consignment of CPC Blue was being transported from one factory to another within the same company. The goods were detained by the respondent's mobile squad on the grounds of e-way bill non-compliance. The applicant deposited a significant amount with the respondent to secure the release of the goods and conveyance. Subsequently, a notice under Section 129(3) of the Act was issued, demanding tax and penalty payment. The applicant argued that as it was an intra-state branch transfer, no GST liability was applicable. However, the respondent passed an order confirming tax and penalty without giving the applicant an opportunity of a personal hearing scheduled for a later date.

The High Court noted a violation of the principles of natural justice in the proceedings. Despite the applicant's detailed written reply, the order was passed before the scheduled date of the personal hearing, indicating a lack of consideration of the applicant's arguments. The respondent contended that since the amount was deposited on the seizure date, no further hearing was necessary. However, the Court rejected this explanation, emphasizing the importance of a meaningful opportunity of being heard as mandated by the statute. The Court highlighted that no tax, interest, or penalty should be determined without providing such an opportunity, which must be substantial and not merely procedural.

Consequently, the Court quashed the impugned order dated 02.07.2019 and remitted the matter back to the respondent for fresh consideration. The respondent was directed to provide a new hearing opportunity to the applicant, consider all submissions, and pass an appropriate order in accordance with the law. The writ application was allowed, and the impugned order was set aside, ensuring that the applicant receives a fair chance to present their case before any further decision is made.