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2024 (7) TMI 1511 - HC - GSTJurisdiction exceeded in demanding the tax amount along with interest and penalty - demand made without even considering the documents submitted in a proper perspective and without affording even a personal hearing - violation of principles of natural justice - HELD THAT - It is well laid down principle of law that when the revenue issues a show cause notice, opportunity has to be given to the taxpayer to submit reply and thereafter an opportunity of hearing is also contemplated under the Act, 2017. In the present case on hand, it is the case of petitioner s that after issuance of show cause notice, he has filed the reply and after the audit report, he has filed the objections and an explanation. However, the same was not taken into account and despite making a request for personal hearing, the same was not granted and hastily respondent No. 3 has proceeded to pass the impugned order by imposing tax, interest and penalty. In the present case on hand, it is the case of respondents that despite providing suitable opportunity, the petitioner/taxpayer has not filed reply in Part-B and he has not filed objections with explanation instead the taxpayer has submitted several documents. He has not filed the reply on time despite granting sufficient opportunity and reminders requesting and insisting the petitioner/taxpayer to file his reply on or before the relevant date stipulated therein and subsequently adhering to the request, provided an opportunity of personal hearing on 22.01.2024 and thereafter again a further reminder to file the reply for DRC-01 and to make use of the opportunity of personal hearing which was scheduled on 27.02.2024. Apparently, it is seen from the impugned order that the response to the show cause notice has not been adverted to and the personal hearing which was sought for by the letter dated 12.03.2024 was also not provided to the petitioner and an impugned order came to be passed on 30.03.2024 under Section 73 (9) and (10) of the KGST Act, 2017. In this background, it is to be seen whether the opportunity of filing reply and the opportunity of personal hearing is mandatory in nature as canvassed by the learned counsel for the petitioner. This Court has already dealt with the provisions of Section 73 (9) and (10) and Section 75 (4) of the Act, 2017 which is unambiguous with regard to a mandatory requirement as the word being used is shall . Reliance placed upon the Judgment of a coordinate Bench of this Court in the case of Breakbounce India (P.) Ltd., vs. Commissioner of Commercial Taxes, 2024 (6) TMI 888 - KARNATAKA HIGH COURT , wherein it is held ' It is noticed that the order passed is an ex-parte order without the say of the petitioner. Though the electronic mode of service may be sufficient, however, in the peculiar facts of this case, taking note of the substantive rights involved, it would serve the interest of justice by remanding the matter and granting another opportunity to the petitioner to participate and make out his reply to the show cause notice dated 27.09.2023.' The petitioner ought to have availed this remedy to challenge the order passed by the respondents/authorities. But, in the present case on hand, the petitioner has filed the reply and the same having not been considered, while passing the impugned order and an opportunity of personal hearing having not been provided, in my humble opinion would be a breach of the fundamental rights of the petitioner and also it would fall within the category of violation of principles of natural justice. Petition allowed.
Issues Involved:
1. Jurisdiction and abuse of power by Respondent No. 3. 2. Validity of the order passed in Form GST DRC-07. 3. Constitutionality of Notification No. 9/2023. 4. Violation of principles of natural justice. 5. Availability and adequacy of alternative remedies. Detailed Analysis: 1. Jurisdiction and Abuse of Power by Respondent No. 3: The petitioner contended that Respondent No. 3 exceeded its jurisdiction and abused its power by demanding tax, interest, and penalty without properly considering the documents and replies submitted by the petitioner. The court found that the proper officer must consider any representation made by the person chargeable with tax before determining the amount due, as mandated by Section 73(9) of the CGST Act. The court held that the failure to consider the petitioner's responses and the issuance of the impugned order without proper consideration constituted an abuse of power. 2. Validity of the Order Passed in Form GST DRC-07: The petitioner sought to quash the order passed in Form GST DRC-07, arguing that it was illegal and untenable in law. The court observed that the impugned order was passed without considering the petitioner's replies and without providing a personal hearing, which violated the principles of natural justice as enshrined in Section 75(4) and (5) of the CGST Act. The court quashed the impugned order dated 30.03.2024 and remitted the matter back to Respondent No. 3 for fresh consideration after affording an opportunity of personal hearing. 3. Constitutionality of Notification No. 9/2023: The petitioner challenged the constitutionality of Notification No. 9/2023, arguing that it was ultra vires the Constitution of India and the provisions of the CGST Act, 2017. The court did not specifically address this issue in detail, as the primary focus was on the procedural lapses and the violation of natural justice principles by Respondent No. 3. 4. Violation of Principles of Natural Justice: The petitioner argued that the impugned order was passed without affording a personal hearing, which violated the principles of natural justice. The court emphasized that Section 75(4) of the CGST Act mandates an opportunity of hearing where a request is received from the person chargeable with tax. The court found that the petitioner's request for a personal hearing was not considered, and the impugned order was passed hastily without proper consideration of the petitioner's responses. The court held that this constituted a violation of the principles of natural justice and quashed the impugned order. 5. Availability and Adequacy of Alternative Remedies: The respondents argued that the petition was not maintainable due to the availability of an alternative efficacious remedy under Section 107 of the CGST Act. The court acknowledged that the existence of an alternative remedy is not an absolute bar to the maintainability of a writ petition under Article 226 of the Constitution of India. The court found that the petitioner's fundamental rights were breached, and the principles of natural justice were violated, which justified the invocation of writ jurisdiction. The court held that the petitioner's case fell within the exceptional circumstances where a writ petition could be entertained despite the availability of an alternative remedy. Conclusion: The court quashed the impugned order dated 30.03.2024 and remitted the matter back to Respondent No. 3 for fresh consideration after affording an opportunity of personal hearing to the petitioner. The court imposed costs of Rs. 50,000 on the petitioner for non-utilization of the opportunities provided and directed the petitioner to appear before Respondent No. 3 on the next date of hearing. The court clarified that the petitioner could not raise the contention of time-bar in the remanded proceedings.
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