2022 (9) TMI 115 - HC - GST

Entitlement to tax exemption from VAT after intorduction of GST - Decline of budgetary support for the period January to March, 2020 - argument of petitioner is that no reason has been assigned for rejecting the part of the claim for the budgetary support and that no notice or opportunity of hearing was given before doing so - principles of natural justice - HELD THAT - The petitioner has been duly granted exemption/budgetary support till the beginning of the year 2020. Even, for the period January to March, 2020 part of the claim for budgetary support has been accepted meaning thereby that the petitioner is eligible for the grant of such benefits - No reason has been assigned anywhere as to why the claim in respect of the balance amount has been rejected. The ineligibility of the petitioner to receive the budgetary support has been decided on the basis of the office memorandum dated 26.07.2021. The said office memorandum was not in existence on the date on which the impugned order was passed i.e. on 26.08.2020. Therefore, it is misconceived to allege that the petitioner was denied benefit of budgetary support on account of ineligibility. The impugned order dated 26.08.2020 is unsustainable in law and that the respondents fell clearly in error in declining the budgetary support for part of the amount for the period January to March, 2020 - The writ petition is disposed of.

Summary

Issues:
Petitioner seeks quashing of order declining part of budgetary support claim for Jan-Mar 2020.

Analysis:
The petitioner, an advocate, approached the High Court seeking to quash an order issued by the respondents, also advocates, on 26.08.2020. The petitioner claimed entitlement to tax exemption until 2023 under the pre-GST scheme, later replaced by budgetary support under GST. The respondents accepted a portion of the petitioner's claim but rejected the balance amount for Jan-Mar 2020. The petitioner argued that no reason was provided for this rejection and no prior notice or hearing was granted.

In response, the respondents contended that a subsequent investigation limited the petitioner's eligibility for budgetary support until 06.11.2017, contrary to the petitioner's claim of entitlement until 2023. The respondents argued that the rejection was based on this revised eligibility determination. However, the petitioner had already been granted budgetary support until the beginning of 2020, indicating eligibility for such benefits. The court noted that no reason was given for rejecting the balance amount of the claim.

The court emphasized that the validity of an order must be based on the reasoning contained within it and cannot be supplemented by external affidavits. Referring to a Supreme Court case, the court highlighted that the reasoning behind orders cannot be altered post hoc. Consequently, the court found the order unsustainable in law due to the lack of justification for declining part of the budgetary support claim for Jan-Mar 2020. The court clarified that it did not determine the petitioner's overall eligibility for budgetary support or the duration of such eligibility.

Ultimately, the court disposed of the writ petition in favor of the petitioner, concluding that the respondents erred in rejecting part of the budgetary support claim without providing adequate reasoning.