2022 (12) TMI 1229 - HC - GST

Validity of Assessment order and Demand of GST - It was alleged that the petitioner was supplied nil rated or exempted supply, but he had not reversed the ITC related to the said exempt supply as per Section 17(2) - violation of principle of natural justice - HELD THAT - This Court notices that this is not the case where the Court would like to employ the ratio laid down in case of Graziano Transmission India Private Limited vs. State of Gujarat 2022 (7) TMI 752 - GUJARAT HIGH COURT . As the facts were completely different and here as can be noticed, his request for adjournment had been acceded to not for 30 days, but for 15 days. The online portal also is indicative of the fact that it was for both adjournment and the personal hearing, however, on 11.02.2022 admittedly, neither the response was given in writing nor had the petitioner appeared in person. He also never bothered thereafter to know as to what had happened on 11.02.2022. It is also a matter of record that search was conducted at the official premise on 17.02.2022 and consequent upon the said search not only the petitioner, but some other employees were also called by the officer concerned for recording the statement and eventually on 21.02.2022, the order came to be passed which is impugned. He has reversed credit as has been detailed in the petition and that according to him was the reason for him to believe that everything was over till he received the communication from the Bank on 21.06.2022 where electronically the demand had been raised and the Bank was asked to adjust his demand - Be that as it may, for present, the petitioner is desirous of going to the Appellate Authority for questioning and challenging the assessment which has been finalized and that being his right, if he has missed out on the limitation, condoning this period of limitation in the given circumstance, keeping the larger issue open, this petition is allowed.

Summary

Issues Involved:
Challenge to action of respondent authority as violative of natural justice principles under Article 226 of the Constitution of India.

Analysis:
1. The petitioner challenged the respondent authority's action, alleging a violation of natural justice principles. The petitioner, engaged in trading activities, received a show cause notice under Section 73 of the CGST Act regarding ITC reversal. Despite requesting an adjournment, the petitioner failed to respond due to GST return filing obligations. Subsequently, search proceedings were conducted, and the petitioner reversed the ITC. The petitioner sought various reliefs, including quashing the order, re-crediting the amount, and removing the bank lien.

2. The petitioner's counsel argued that despite the adjournment and personal hearing being granted, the adverse decision lacked a mandatory personal hearing, citing a previous court decision. The respondent contended that the adjournment and personal hearing were granted, but the petitioner failed to respond, leading to the order being passed after search proceedings. The respondent emphasized compliance with directions and the petitioner's lack of action.

3. The court noted the petitioner's adjournment request for 15 days, not 30, and the granted personal hearing opportunity. The petitioner's non-compliance and lack of follow-up post the adjourned date were highlighted. The court differentiated this case from a previous judgment due to distinct facts. Despite the search and subsequent actions, the petitioner's inaction until June was deemed his responsibility, not the officer's fault.

4. The court allowed the petition, permitting the challenge to the order before the Appellate Authority within two weeks. The authority was directed to decide the appeal independently, providing due opportunity to the petitioner. The petitioner could seek recredit of the amount, excluding pre-deposit, with no coercive recovery until a decision. Direct service of the order through e-mode was also permitted for efficient communication.