2022 (9) TMI 480 - HC - GST

Violation of Principles of natural justice - ex-parte adjudication order passed - no relied upon documents were ever provided to the petitioner - opportunity of personal hearing not granted - HELD THAT - It appears that no relied upon documents were ever provided to the petitioner nor opportunity of personal hearing was granted. The law casts an obligation upon the parties to serve the documents/inspection report/intelligence note which has been relied upon by either of the parties in a proceedings - In the instant case, no document has ever been served upon the Petitioner and/or no opportunity of hearing was given being in violation of Principles of Natural Justice and also the mandate of the Act. The Hon ble Supreme Court in the case of AYAAUBKHAN NOORKHAN PATHAN VERSUS THE STATE OF MAHARASHTRA OTHERS 2013 (8) TMI 563 - SUPREME COURT has held that in a case where the respondents have relied upon the documents obtained during inspection in the premises of the petitioners on the basis of intelligence note, it should be given to the petitioners to enable them to properly answer the charges there passed upon - In the case at hand, it clearly transpires that the impugned adjudication order dated 15.09.2020, has been passed in utter violation of principles of natural justice and also in utter defiance to the provisions of section 75(4) and section 75 (5) of the JGST Act. As a matter of fact, in the instant case the ex-parte adjudication order under section 73 of the JGST Act has been passed without giving any opportunity of hearing to the Petitioner as per section 75(4) of the Act and even without appreciating the documents on record and without verifying the electronically uploaded forms and information, merely on the behest of the superior authority. Since opportunity of personal hearing was not given to the petitioner nor relied upon documents were provided; interest of justice would suffice by remitting the matter back to the authority for compliance of the necessary provision especially Section 75(4) of the JGST Act. Consequentially, adjudication order dated 15.09.2020 is quashed and set aside. The matter is remitted back to the concerned respondent who shall issue a fresh notice to the petitioner for personal hearing and after providing relied upon documents and hearing the petitioner following proper principle of natural justice pass a fresh order.

Summary

Issues:
1. Quashing of show cause notice under JGST Act
2. Quashing of ex-parte order under JGST Act
3. Unblocking credit ledger

Analysis:
1. The petitioner, a Partnership Firm, sought relief from a show cause notice issued under Reference no. 98 dated 30.07.2020 under section 73(1) and Rule 142(1) of the Jharkhand Goods and Services Taxes (JGST) Act. The petitioner argued that no fraud was involved in availing Input Tax Credit (ITC) as the supplier was registered and compliant. The court noted that the respondent failed to provide relied-upon documents to the petitioner, violating principles of natural justice and the Act. Citing the Ayaaubkhan Noorkhan Pathan case, the court emphasized the importance of providing documents to enable proper defense. It held the adjudication order passed without hearing and document verification was in violation of natural justice and JGST Act sections 75(4) and 75(5).

2. The petitioner also sought to quash the ex-parte order under Reference no. 201 dated 15.09.2020 under section 73(9) of the JGST Act. The respondent alleged fraudulent ITC availment by the petitioner from a non-existent dealer. The court found that the petitioner was not granted a proper opportunity of hearing before the assessment orders were passed. Notably, the absence of an order sheet raised concerns about procedural irregularities. The court emphasized the necessity of providing an opportunity of hearing before adverse decisions, as per JGST Act section 75(4). It referenced a previous case, M/s. Godavari Commodities Ltd. Vs. The State of Jharkhand & Ors, to support this stance. Consequently, the court quashed the adjudication order and remitted the matter for compliance with Section 75(4) and principles of natural justice.

3. The petitioner also requested the unblocking of a credit ledger worth Rs. 5,18,731/-, blocked prior to receiving the show cause notice under the JGST Act. The court's decision to quash the ex-parte order and remit the matter back to the authority for compliance with necessary provisions, including granting a personal hearing and providing relied-upon documents, indirectly addressed the issue of unblocking the credit ledger. The court's focus on ensuring procedural fairness and adherence to legal requirements underlined the importance of due process in tax matters.

In conclusion, the High Court of Jharkhand allowed and disposed of the writ application, emphasizing the significance of procedural fairness, opportunity of hearing, and document disclosure in tax assessment proceedings under the JGST Act.