2024 (2) TMI 181 - HC - GST

Violation of principles of natural justice (audi alteram partem) - Detention of goods - levy of penalty - e-Way Bill had expired though the same was accompanied with goods - HELD THAT - The issuance of a show cause notice represents a pivotal juncture in administrative proceedings, demarcating the boundaries within which any authority can exercise its powers. By adhering to the confines of the notice, authorities uphold principles of fairness, accountability, procedural regularity, and legal certainty essential for the legitimacy and effectiveness of governance systems. Any attempt to transcend these limits not only violates the rights of the individuals or entities involved but also undermines the rule of law and public trust in the institutions tasked with upholding it. Thus, this Court holds that, adhering to the show cause notice is not merely a procedural formality, but a mandatory requirement, beyond the scope of which, no action can be taken. Adherence to the show cause notice is a fundamental safeguard against arbitrary exercises of power, ensuring that authority remains tethered to the principles of justice and the rule of law. In RAMLALA VERSUS STATE OF U.P. AND 4 OTHERS. 2023 (11) TMI 1218 - ALLAHABAD HIGH COURT , this Court, while placing reliance on The Board of High School and Intermediate Education, U.P. -v- Kumari Chitra Srivastava, 1969 (11) TMI 88 - SUPREME COURT , held that the reason to not allow the authorities to go beyond the show cause notice is that a person must be given a chance to put up his case with regard to the said show cause notice. In the present case, it is evident that the authorities have travelled beyond reasons provided in the show cause notice and imposed penalty on the ground that was never provided to the petitioner in the show cause notice. The petitioner never had any opportunity to defend itself on the said ground, and therefore, the show cause notice is directly in teeth of the principles of natural justice, namely, the principle of audi alteram partem. The impugned orders in the instant case, cannot be allowed to stand. Accordingly, a writ of certiorari is issued against the impugned orders dated August 20, 2019 and July 24, 2018. These orders are hereby quashed and set aside - Petition allowed.

Summary

Issues involved:
The issues involved in the judgment are the validity of the penalty imposed beyond the grounds specified in the show cause notice and the importance of adhering to the boundaries set by a show cause notice in administrative and legal proceedings.

Validity of Penalty Imposed:
The petitioner filed a writ petition under Article 226 of the Constitution of India challenging the penalty order dated July 24, 2018, passed by the Assistant Commissioner, State Tax/Commercial Tax, Gautam Budh Nagar. The appellate authority accepted the plea mentioned in the show cause notice regarding the destination of the vehicle but imposed a penalty on a different ground, i.e., the expiry of the e-Way Bill. The Supreme Court precedent emphasizes that authorities cannot go beyond the grounds specified in the show cause notice. The judgment in Commissioner of Customs, Mumbai -v- Toyo Engineering Ltd. underscores the necessity of specifying grounds for taking action against an individual in the notice. The Court held that the imposition of penalty on a ground not mentioned in the show cause notice violates the principles of natural justice, particularly audi alteram partem.

Adherence to Show Cause Notice:
The concept of a show cause notice serves as a crucial checkpoint in administrative and legal processes, providing individuals or entities with an opportunity to respond to allegations before any punitive action is taken. The notice ensures fairness, due process, and adherence to the principle of audi alteram partem. The judgment highlights that any action taken beyond the scope of the show cause notice risks illegality and procedural unfairness. It is essential for authorities to specify allegations clearly in the notice to enable recipients to respond effectively. Deviating from the grounds outlined in the notice undermines the rule of law, procedural regularity, and public trust in governance systems. The judgment emphasizes that adherence to the show cause notice is not a mere formality but a mandatory requirement to prevent arbitrary exercises of power and uphold justice and legal principles.

Separate Judgment:
In the present case, the Court held that the penalty imposed beyond the grounds specified in the show cause notice violated the principles of natural justice. A writ of certiorari was issued against the impugned orders, quashing and setting them aside. The Court directed the refund of the deposited amount to the petitioner within four weeks. The writ petition was allowed, providing relief to the petitioner based on the violation of the show cause notice principles and the importance of procedural fairness in administrative proceedings.