2024 (11) TMI 333 - HC - GST

Challenge to proceedings of the respondent in Summary of the Order in Form GST DRC-07 dated 29.04.2024 - reversal of ITC availed by the petitioner - petitioner had availed ITC from tax payer, who did not pay tax on outward supply made to the petitioner - respondent, without affording any opportunity of personal hearing to the petitioner, passed the impugned order - violation of principles of natural justice - HELD THAT - The petitioner, upon receipt of such show cause notice, filed reply dated 16.04.2024 in Form GST DRC-06, however, the respondent, without affording any opportunity of personal hearing to the petitioner, passed the impugned order, thereby, confirming the proposals contained in the show cause notice. In terms of Section 75 (4) of the CGST Act, it is mandatory on the part of the respondent to provide an opportunity of hearing to the assessee before passing any adverse order, whereas, in the present case, no such opportunity was granted to the petitioner before confirming the demand made in the show cause notice, therefore, the impugned order is not only against the provisions contemplated under the Section 75 (4) of CGST Act but also suffers from violation of principles of natural justice. Hence, this Court is inclined to set aside the impugned order. The impugned order is set aside - the matter is remanded to the respondent for fresh consideration, in which case, the respondent is directed to issue a clear 14 days notice, thereby, affording an opportunity of personal hearing to the petitioner and after considering the reply that has already been filed by the petitioner and hearing the petitioner in full, shall decide the matter in accordance with law - Petition allowed by way of remand.

Summary

Issues:
Challenge to proceedings in Form GST DRC-07 dated 29.04.2024 and request to quash it based on lack of opportunity of hearing and violation of principles of natural justice.

Detailed Analysis:
The petitioner, an assessee under the CGST/SGST Act, received a show cause notice in Form DRC-01 dated 27.12.2023, demanding reversal of ITC availed due to alleged non-payment of tax by the supplier. The respondent confirmed this demand through an order dated 29.04.2024, without granting the petitioner an opportunity of personal hearing. The petitioner contended that Section 75(4) of the CGST Act mandates providing a hearing before passing an adverse order. The petitioner's counsel argued that the lack of a hearing violated both the statutory provision and principles of natural justice, urging the court to set aside the impugned order.

During the proceedings, the respondent admitted that no personal hearing was granted to the petitioner post the submission of their reply to the show cause notice. Consequently, the court considered the arguments from both sides and reviewed the available records. It noted the mandatory nature of providing a hearing under Section 75(4) of the CGST Act and the violation of principles of natural justice in the current case due to the absence of a hearing. Therefore, the court decided to set aside the impugned order.

As a result, the court issued the following directions: Firstly, the impugned order dated 29.04.2024 was set aside. Secondly, the matter was remanded to the respondent for fresh consideration, with a specific directive to issue a clear 14-day notice to the petitioner, allowing for a personal hearing. The respondent was instructed to consider the petitioner's filed reply, conduct a full hearing, and decide the matter in accordance with the law. Ultimately, the writ petition was allowed on the mentioned terms without any costs, and the connected Miscellaneous Petitions were closed.