2024 (8) TMI 770 - HC - GST

Violation of principles of natural justice - denial of an opportunity of hearing - challenge to order u/s 73 (9) read with Rule 142 of the Maharashtra GST Act - cancellation of GST registration of petitioner - HELD THAT - The principles of natural justice were inbuilt in the statutory provisions itself and mandate an opportunity of hearing, either (1) Where a request in writing is received from the person chargeable with tax or penalty or (2) where any adverse decision is contemplated against such person. Even presuming, that no reply was given by the petitioners, that, however, did not prevent it from justifying the self-assessment for the period July, 2017 to March, 2018, submitted by him to the GST authorities, for which, an opportunity of hearing was necessary. The notice dated 01.11.2021 (page 41), indicates, that no date, time or venue was indicated for personal hearing, on the contrary, it was stated to be not applicable. The subsequent notice dated 14.12.2021 (page 45), 02.12.2022 (page 46) as well as the screen shot of the GST portal dated 26.2.2024, all depict the same position, considering which, it is apparent, that the requirement of Section 75 (4) of the GST Act, 2017 has not been complied with. The matter is remitted back to the respondent, to grant an opportunity of hearing to the petitioners as contemplated by Section 75 (4) of the GST Act, 2017 - Petition disposed off by way of remand.

Summary

Issues:
Challenge to GST assessment order under Section 73 (9) read with Rule 142 of the Maharashtra GST Act. Denial of opportunity of hearing reflected in the impugned order dated 09.1.2023.

Analysis:
1. The petitioners contested an order under Section 73 (9) of the Maharashtra GST Act assessing them to GST amounting to Rs. 14,77,371 for purchases made during July 2017 to March 2018, including interest and penalty. The petitioners argued that since their GST registration was canceled, the subsequent assessment was without jurisdiction. However, the court held that the cancellation of registration does not absolve the liability to pay taxes or other dues under the Act, as mandated by Section 29 (3) of the GST Act. The court emphasized that the cancellation does not prevent the authorities from determining dues post-cancellation, even if based on self-assessment by the taxpayer.

2. The petitioners further contended that the impugned order dated 09.1.2023 was flawed for denying them an opportunity of hearing, as evidenced by various notices and documents. The Assistant Government Pleader argued that since no reply was filed by the petitioners, there was no obligation to grant a hearing. However, the court referred to Section 75 (4) of the GST Act, which mandates granting an opportunity of hearing upon a request in writing from the taxpayer or when an adverse decision is contemplated. The court found that the notices issued did not comply with the requirement of providing an opportunity of hearing, leading to the conclusion that natural justice principles were not followed.

3. The court highlighted that the statutory provisions of the GST Act inherently include principles of natural justice, requiring an opportunity of hearing in specific circumstances. Despite the lack of response from the petitioners, the court emphasized that the right to justify self-assessment and be heard was essential. Consequently, the court set aside the impugned order dated 09.1.2023 and directed the respondent to grant the petitioners a proper opportunity of hearing in accordance with Section 75 (4) of the GST Act, 2017.

4. As a result of the judgment, the matter was remitted back to the respondent for a fresh hearing, and the petitioners were instructed to appear before the respondent on a specified date. The court also ordered the continuation of the bank guarantee submitted by the petitioners for the specified period. The judgment focused on upholding procedural fairness and ensuring that the petitioners were accorded their right to be heard in the assessment process, as mandated by the relevant provisions of the GST Act.