2024 (8) TMI 141 - HC - GST

Enhancement of tax - levy of penalty and additional tax - without providing any opportunity to the petitioner, adverse adverse material has been used against the petitioner - violation of principles of natural justice - HELD THAT - It is evident from the appellate order that the appeal of the petitioner was partly allowed and the taxable turnover has partly been reduced. Further, the record shows that by a letter, report was submitted by the proper officer about the survey dated 24.03.2008, which has adversely been taken against the petitioner to which, no opportunity was given. The Hon'ble Apex Court in the case of Oryx Fisheries Private Limited 2010 (10) TMI 660 - SUPREME COURT has held that ' It is no doubt true that at the stage of show cause, the person proceeded against must be told the charges against him so that he can take his defence and prove his innocence. It is obvious that at that stage the authority issuing the charge- sheet, cannot, instead of telling him the charges, confront him with definite conclusions of his alleged guilt. If that is done, as has been done in this instant case, the entire proceeding initiated by the show cause notice gets vitiated by unfairness and bias and the subsequent proceeding become an idle ceremony.' Once the material used against the petitioner has not been confirmed, the impugned order cannot sustain in the eyes of law and the same is hereby set aside - The matter is remanded to the authority concerned to decide the case de-novo - Petition allowed by way of remand.

Summary

Issues:
Challenge to tax enhancement and penalty imposition based on survey and seizure inspection.

Analysis:
The petitioner challenged the orders of tax enhancement and penalty imposition issued by the Additional Commissioner Grade-II and Assistant Commissioner State Tax. The petitioner, engaged in the manufacture and sale of wooden furniture, argued that the initial notice under Section 73 of the UPGST Act was improper as there was no finding of wilful misrepresentation or tax evasion. However, the petitioner failed to raise this objection at the appropriate stages of the proceedings. Upon withdrawal of this submission, the petitioner contended that adverse material was used without providing an opportunity for rebuttal. The counsel referred to the impugned orders and highlighted the lack of opportunity given to the petitioner to respond to the adverse material.

The Standing Counsel supported the impugned orders, stating that the petitioner repeatedly ignored notices and that the survey revealed suppressed manufacturing of goods. The counsel argued that the report from the State Officer did not introduce new material against the petitioner. The Court reviewed the record and noted that the appellate order partially allowed the petitioner's appeal, reducing the taxable turnover. It was observed that the report submitted by the proper officer regarding the survey was used against the petitioner without affording an opportunity for rebuttal.

Referring to the judgment in Oryx Fisheries Private Limited Vs. Union of India, the Court emphasized the importance of a fair opportunity for the person proceeded against to defend themselves. Citing principles of 'reasonable opportunity,' the Court held that the petitioner must be informed of the charges to allow for a defense. As the material used against the petitioner was not confirmed, the impugned order was set aside, and the matter was remanded for a fresh decision by the concerned authority. The authorities were directed to decide the case within three months after hearing all stakeholders and providing a reasoned order.