2022 (5) TMI 1294 - HC - GST

Violation of principles of natural justice - fair opportunity of hearing not provided - ex-parte order - excess claim of Input Tax Credit - HELD THAT - This Court, notwithstanding the statutory remedy, is not precluded from interfering where, ex facie , we form an opinion that the order is bad in law. This we say so, for two reasons- (a) violation of principles of natural justice, i.e. Fair opportunity of hearing. No sufficient time was afforded to the petitioner to represent his case; (b) order passed ex parte in nature, does not assign any reasons sufficient even decipherable from the record, as to how the officer could determine the amount due and payable by the assessee. The order, ex parte in nature, passed in violation of the principles of natural justice, entails civil consequences. We also find the authorities not to have adjudicated the matter on the attending facts and circumstances. Petition disposed off.

Summary

Issues Involved:
Petition to quash demand of tax on excess input tax credit, violation of natural justice, ex parte order lacking reasons, interference by the Court, statutory remedy, disposal terms, deposit requirements, de-freezing bank accounts, hearing before Assessing Authority, liberty to challenge order, pandemic proceedings, communication of order.

Issue 1: Petition to Quash Demand of Tax on Excess Input Tax Credit

The petitioner sought relief to quash various orders related to the demand of tax on the ground of excess claim of input tax credit for the period of 2018-19. The Court noted that the order was ex parte in nature, lacking sufficient reasons and violating principles of natural justice by not providing adequate time for the petitioner to represent their case. The Court held that the authorities failed to adjudicate the matter properly, and thus, interfered despite the availability of statutory remedy. The Court quashed all impugned notices and orders related to the demand of tax.

Issue 2: Violation of Natural Justice and Lack of Reasons in Ex Parte Order

The Court emphasized the importance of natural justice, fair opportunity of hearing, and the need for reasons to be provided in orders, especially when determining tax liabilities. The Court found the ex parte nature of the order problematic, as it did not contain discernible reasons or consider all facts and circumstances. Consequently, the Court intervened, highlighting the civil consequences of such orders passed in violation of natural justice principles.

Issue 3: Court's Interference Despite Statutory Remedy

The Court justified its interference by stating that despite the availability of a statutory remedy, it can intervene if it perceives an order to be legally flawed. The Court's decision to quash the impugned notices and orders was based on the clear violations of natural justice and the lack of proper adjudication by the authorities, even in ex parte proceedings. The Court's intervention was deemed necessary to ensure fairness and justice in the case.

Issue 4: Disposal Terms and Conditions

The Court disposed of the petition by setting forth various conditions for the petitioner, including deposit requirements, appearance before the Assessing Authority, de-freezing of bank accounts, and cooperation in the proceedings. The Court directed the Assessing Authority to decide the case on merits, afford opportunities for hearing, and pass a speaking order with reasons. The Court also granted liberty to challenge the order and reserved rights for all parties to seek other remedies available in accordance with the law.

Issue 5: Conducting Proceedings During Pandemic and Communication of Order

In light of the ongoing pandemic, the Court directed that proceedings, if possible, should be conducted through digital mode for convenience and safety. The Court also instructed the respondents' counsel to communicate the order to the appropriate authority electronically. These measures aimed to ensure the smooth continuation of legal processes while considering the challenges posed by the pandemic situation.

This detailed analysis of the judgment highlights the key issues addressed by the Court, the reasons for its decisions, and the conditions imposed for the resolution of the dispute.