2024 (6) TMI 231 - HC - GST

Violation of principles of natural justice - no opportunity of hearing had been offered to the petitioner prior to passing of the order - order issued u/s 73 of the CGST Act, 2017/WBGST Act, 2017 - HELD THAT - Admittedly, in this case a show cause notice dated 31st January, 2023 had been issued. As would appear from Rule 142(3) of the Central Goods and Services Tax Rules, 2017 since, time to make payment of tax and interest under sub-section (8) of Section 73 is 30 days from the date of service of notice, no order under Section 73(9) of the said Act can be passed before expiry of the period of 30 days. As such ordinarily the assessee is provided with a 30 days window to file its response to the notice under Section 73(1) of the said Act. In this case, it would appear from the show cause notice dated 31st January, 2023, that 30 days window had been provided to the petitioner as the date for filing of the response was fixed on 2nd April, 2023. It is true, that the petitioner did not file its response to the aforesaid show cause nor did the petitioner make any application praying for personal hearing. From the show cause notice dated 31st January, 2023 it appears that the petitioner was offered opportunity of hearing on 20th February, 2023, could not have satisfied the requirements of being afforded with a reasonable opportunity of hearing under the provisions of Section 75(4) of the said Act - the order dated 4th August, 2023 stands vitiated on the ground of failure of natural justice. The petitioner is remanded back to the proper officer in respect of the show cause notice dated 31st January, 2023, with a further direction upon the proper officer to afford the petitioner an opportunity of hearing and to consider the documents to be produced by the petitioner in course of the hearing and to dispose of the proceeding under Section 73(1) of the said Act, by taking the same to a logical conclusion within a period of four weeks from the date of communication of this order. Petition disposed off by way of remand.

Summary

Issues:
Challenging order under Section 73 of the Central Goods and Services Tax Act, 2017/West Bengal Goods and Services Tax Act, 2017 for the financial year 2017-18 based on failure of natural justice.

Analysis:
The petition challenges an order dated 4th August, 2023, issued under Section 73 of the Central Goods and Services Tax Act, 2017/West Bengal Goods and Services Tax Act, 2017 for the financial year 2017-18. The petitioner argues that the proper officer did not provide a proper opportunity of hearing as required by law. Despite a show cause notice issued on 31st January, 2023, the personal hearing was scheduled before the deadline for submitting a response. The petitioner contends that the purpose of a personal hearing is to clarify the response submitted, and without a response, a personal hearing is premature. The petitioner invokes Section 75(4) of the Act, emphasizing that the proper officer must provide an opportunity of hearing regardless of whether the petitioner requested it. The lack of a proper hearing before the order dated 4th August, 2023, renders the entire proceeding flawed due to a violation of natural justice. The petitioner seeks to set aside the order and have the matter remanded for fresh adjudication.

Upon hearing both parties, the court notes that as per Rule 142(3) of the Central Goods and Services Tax Rules, 2017, the assessee is typically given 30 days to respond to a show cause notice under Section 73(1) of the Act. In this case, the petitioner was granted a 30-day window to respond, with the deadline set for 2nd April, 2023. Although the petitioner did not submit a response or request a personal hearing, the proper officer still had an obligation to provide a reasonable opportunity of hearing under Section 75(4) of the Act, especially when an adverse order was anticipated. The court finds that the hearing scheduled for 20th February, 2023, before the response deadline of 2nd April, 2023, did not meet the requirements of a fair hearing as mandated by the Act.

Consequently, the court rules that the order dated 4th August, 2023, is invalid due to a breach of natural justice. The order is set aside, and the petitioner is remanded to the proper officer for reconsideration of the show cause notice dated 31st January, 2023. The proper officer is directed to provide the petitioner with a proper opportunity of hearing, consider any documents presented during the hearing, and conclude the proceedings under Section 73(1) of the Act within four weeks from the date of the court's order. The court clarifies that it has not assessed the merits of the show cause notice and instructs the proper officer to adjudicate the matter impartially based on the available evidence. As no affidavit-in-opposition was submitted, the court deems the allegations in the petition as not admitted by the respondents. Finally, the court orders the issuance of a certified copy of the order to the parties upon request.