2021 (11) TMI 934 - HC - GST

Confiscation - penalty - neither the tax nor the penalty, as demanded, was deposited by the owner of the goods or the transporter - Section 107 of the U.P. Goods and Services Tax Act, 2017 - HELD THAT - The facts and circumstances reflect that the show cause notice dated 23.12.2020 was misleading and incorrect. Where a show cause notice in Form GST MOV-10 is issued, which is a preclude to possibility of imposition of liability in the nature of civil consequences against a person, the same has to be specific, containing necessary and correct particulars that may enable the noticee to clearly understand the matter and appear or file his reply on the date and in the manner specified in the notice. Evidently, the show cause notice sent in the aforesaid Form GST MOV-10 dated 23.12.2020 does not comply with the aforesaid requirement as the date for appearance is stated as 28.11.2020. The quandary and dilemma that can visit a person served with such a show cause notice can only be imagined. Had the show cause notice Form GST MOV-10 been properly prepared, the petitioner could have had adequate opportunity to represent his case and, subject to such proof as required by clause (v) of sub-section (1) of Section 130 of the Act, would not have been saddled with the liability under sub-sections (2) and (3) of Section 130 of the Act. Therefore, the show cause notice Form GST MOV-10 that was issued was defective which resulted in denial of opportunity to the petitioner, and as such, cannot be said to be a show cause notice in the eyes of law. Thus, not only have the principles of natural justice not been complied with by the respondents, the petitioner has also been prejudiced by such non-compliance. There is no material on record to demonstrate that an opportunity of hearing was duly granted to the petitioner as is the mandate of sub-section (4) of Section 130 of the Act. The order passed by the Additional Commissioner Grade II (Appeal)-I, State Tax, Agra as well as the order dated 29.11.2020 Form GST MOV-11 passed by the Assistant Commissioner (Mobile Squad) Unit-2, Commercial Tax, Agra cannot be sustained and are hereby quashed - Petition allowed.

Summary

Issues Involved:
1. Legality of the order dated 29.11.2020 in Form GST MOV-11 for confiscation of the vehicle and imposition of penalty.
2. Validity of the appellate order dated 28.06.2021 dismissing the appeal under Section 107 of the U.P. Goods and Services Tax Act, 2017.
3. Compliance with the principles of natural justice, specifically the opportunity of being heard as mandated by sub-section (4) of Section 130 of the Act.
4. Procedural fairness and accuracy of the show cause notice in Form GST MOV-10.

Issue-Wise Detailed Analysis:

1. Legality of the Order Dated 29.11.2020 in Form GST MOV-11:
The petitioner challenged the order dated 29.11.2020 issued in Form GST MOV-11, which resulted in the confiscation of the vehicle and imposition of a penalty. The order was issued following the interception of the vehicle and the discovery of undeclared goods during physical verification. The petitioner argued that the order was issued without proper notice and an opportunity to be heard, violating the principles of natural justice. The court found that the show cause notice in Form GST MOV-10 was defective as it contained a date for appearance that predated the issuance of the notice, thereby denying the petitioner a fair opportunity to present his case.

2. Validity of the Appellate Order Dated 28.06.2021:
The appellate order dated 28.06.2021 dismissed the petitioner's appeal against the confiscation order. The court noted that the appellate authority did not address the defective show cause notice in Form GST MOV-10 and failed to consider the petitioner's contention regarding the lack of opportunity to be heard. The court emphasized that the appellate authority's order was not in compliance with the statute, particularly Section 130(4) of the Act, which mandates an opportunity of hearing before issuing an order for confiscation or penalty.

3. Compliance with the Principles of Natural Justice:
The principles of natural justice, particularly the right to a fair hearing, were central to the court's analysis. The court cited the Supreme Court's decision in Dharampal Satyapal Ltd. v. Deputy Commissioner of Central Excise, emphasizing that procedural fairness is essential for ensuring accurate and appropriate outcomes. The court found that the respondents failed to comply with these principles, as the petitioner was not given a proper opportunity to be heard due to the defective show cause notice.

4. Procedural Fairness and Accuracy of the Show Cause Notice in Form GST MOV-10:
The court scrutinized the show cause notice in Form GST MOV-10, which was issued on 23.12.2020 with a date for appearance set as 28.11.2020. This discrepancy rendered the notice misleading and incorrect, causing confusion and denying the petitioner a fair chance to respond. The court held that a show cause notice must contain specific, necessary, and correct particulars to enable the noticee to understand the matter and respond appropriately. The defective notice in this case resulted in a denial of natural justice and procedural fairness.

Conclusion:
The court quashed both the order dated 29.11.2020 in Form GST MOV-11 and the appellate order dated 28.06.2021, citing non-compliance with the principles of natural justice and procedural fairness. The court allowed the respondents to issue a fresh show cause notice and proceed in accordance with the law, ensuring that the petitioner is given a fair opportunity to be heard. The writ petition was allowed, emphasizing the importance of adherence to statutory requirements and natural justice in administrative proceedings.