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2023 (7) TMI 1101 - HC - GSTViolation of the principles of natural justice (audi alteram partem) - petitioner was not afforded an opportunity of personal hearing before passing of the impugned order - alleged fraudulent business transactions - traders found to be non-existent - HELD THAT - It is an admitted case that neither the petitioner nor any legal representative on its behalf had been granted any personal hearing so as to explain or canvas its case before the Adjudicating Authority. The respondent despite being afforded several opportunities to file the counter affidavit, has not denied the allegations or the contentions raised by the petitioner. Thus, the averments made in the petition stand admitted by the respondent, as the same have not been traversed. When the statute itself provides that a hearing is required to be given to the person against whom an adverse decision is contemplated, it cannot be contended on behalf of the authorities that the same is not mandatory. In the facts of the present case, there is a clear violation of the principles of natural justice. The order has been passed disregarding the specific provisions incorporated by the Legislature in consonance with the well-settled principles of audi alteram partem - it is difficult to understand why and how any person with a reasonable understanding of the law could observe that a telephonic conversation and the visit of the representative of a party can be considered as a personal hearing - the impugned order, therefore, has been passed in clear violation of the provisions of Section 75(4) and Section 75(5) of the CGST Act and is also in clear violation of principles of natural justice. The Officer seems to be in some sort of hurry to conclude adjudication prior to the end of Financial Year on 31.03.2021 and passed the order, the very next day of filing of the reply - the same is clearly not only in violation of statutory principles of the Act but also is clear violation of the principles of natural justice. The mere availability of alternate remedy, however, does not oust the jurisdiction of the High Court and will not make the writ petition as not maintainable. The availability of alternate remedy does not operate as a bar on the power of the High Court to exercise jurisdiction under Article 226 of Constitution of India. The present case is a clear case of violation of the provisions of the Act as well as the violation of principles of natural justice and is a fit case for exercise of discretionary jurisdiction of the High Court under Article 226 of the Constitution of India. The matter remanded to enable the respondent to pass a fresh order after affording the petitioner a due opportunity to be heard. Dereliction of duties on the part of the concerned officer - HELD THAT - The conduct of the respondent, as discussed above, is highly improper. Almost two years of the judicial time has been wasted only for the reason that respondent at first wanted to place the counter affidavit on record and then sought further time to file counter affidavit. - Cost of ₹5,000/- imposed on the respondent i.e. Commissioner of GST.
Issues Involved
1. Violation of Principles of Natural Justice 2. Opportunity of Personal Hearing 3. Adherence to Statutory Provisions 4. Availability of Alternate Remedy Summary Violation of Principles of Natural Justice The petitioner challenged the demand order dated 25.03.2021, issued under Section 74(9) of the CGST Act, on the ground that it was passed in gross violation of the principles of natural justice. The petitioner argued that no opportunity for a personal hearing was provided before the order was passed, which is a fundamental requirement under the law. Opportunity of Personal Hearing The petitioner emphasized that the impugned order was passed without granting any personal hearing, despite the petitioner's explicit request for the same. The petitioner relied on various judgments and a circular dated 10.03.2017, which mandates at least three opportunities for personal hearing. The respondent countered that the principles of natural justice are not a rule of thumb and that the telephonic conversations and visits by the petitioner's representatives were equivalent to a personal hearing. Adherence to Statutory Provisions The court noted that Section 75(4) and 75(5) of the CGST Act explicitly require an opportunity of hearing to be granted when requested in writing or when an adverse decision is contemplated. The court found that the respondent's actions were contrary to these statutory provisions. The court also observed that the respondent's claim that telephonic conversations and visits by representatives amounted to a personal hearing was untenable. Availability of Alternate Remedy The respondent argued that the petitioner had an alternate remedy to challenge the impugned order by filing an appeal. However, the court held that the existence of an alternate remedy does not oust the jurisdiction of the High Court, especially in cases involving violations of principles of natural justice. The court cited various precedents to support this view. Conclusion The court concluded that the impugned order was passed in clear violation of Section 75(4) and Section 75(5) of the CGST Act and the principles of natural justice. The court set aside the demand notice dated 25.03.2021 and remanded the matter for a fresh order after affording the petitioner a due opportunity to be heard. Additionally, the court imposed a cost of Rs. 5,000 on the respondent for wasting judicial time and causing harassment to the litigant.
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