2024 (12) TMI 47 - HC - GST

Legality of the Order-in-Original and Summary of the Order under the CGST/AGST Act, 2017 - Entitlement of the petitioner to Input Tax Credit (ITC) - refund of ITC on zero-rated supplies - after submission of the reply by the petitioner seeking time, the Adjudicating Authority did not apprise the petitioner about the next date of hearing in connection with the Demand cum- Show Cause Notice under reference - violation of principles of natural justice - HELD THAT - It does not emerge from the facts of the case that the petitioner was not provided with any kind of prior opportunity and hearing before issuance of the impugned Order-in-Original. In the case in hand, it is not the case of the petitioner that the petitioner did not receive the Demand cum- Show Cause Notice. On receipt of the Demand cum- Show Cause Notice, the petitioner ought to have replied to the said Demand cum- Show Cause Notice. By issuance of a show cause notice, a noticee is asked to respond to the proposed action. With issuance of a show cause notice, the rights and obligations of the parties are not decided finally - A tentative view taken in the process cannot be deemed to be the final view taken in the matter. The final view is dependent on the response received from the noticee and if the noticee is able to show sufficient cause as to why no action as contemplated under the show cause notice should be taken the final view may altogether be different. In the case in hand, with the petitioner did not avail the opportunity of submitting an effective reply to the show cause notice after seeking time for four weeks and declined to avail any personal hearing. In such scenario, it is not open for the petitioner to raise a ground that it was a case of no notice and no opportunity of hearing. In view of the fact that an adequate, efficacious and statutory remedy has already been provided to assail an order like the Order-in-Original dated 08.04.2024 before the Appellate Authority, this Court is of the view that this writ petition preferred under Article 226 of the Constitution of India is not to be entertained at this stage, reserving the liberty to the petitioner to avail statutory remedy of appeal under Section 107 of the CGST/AGST Act, 2017. It is accordingly observed. The writ petition stands disposed of.

Issues Involved:

1. Legality of the Order-in-Original and Summary of the Order under the CGST/AGST Act, 2017.
2. Entitlement of the petitioner to Input Tax Credit (ITC) and refund claims.
3. Alleged procedural lapses and violation of principles of natural justice.
4. Availability of alternative statutory remedy under Section 107 of the CGST/AGST Act, 2017.
5. Freezing of the petitioner's bank account and its implications on filing an appeal.

Detailed Analysis:

1. Legality of the Order-in-Original and Summary of the Order:

The petitioner challenged the Order-in-Original dated 11.09.2024, issued under Section 74 of the CGST/AGST Act, 2017, which demanded tax, interest, and penalty amounting to Rs. 1,27,45,000/- for the period April 2022 to March 2023. The petitioner sought to prevent the enforcement of this order and its summary. The court recognized that the adjudicating authority had issued the order following a Demand-cum-Show Cause Notice, which alleged erroneous refund claims by the petitioner.

2. Entitlement to Input Tax Credit (ITC) and Refund Claims:

The petitioner argued entitlement to ITC on coal purchases and claimed refunds on zero-rated supplies. The Demand-cum-Show Cause Notice alleged that the petitioner claimed a refund of Rs. 54,00,424/- without receiving any ITC during the relevant period. The court noted that the adjudicating authority had verified these claims and found discrepancies, leading to the issuance of the impugned order.

3. Alleged Procedural Lapses and Violation of Principles of Natural Justice:

The petitioner contended that the adjudicating authority did not provide adequate opportunity to respond effectively to the Demand-cum-Show Cause Notice. The petitioner had sought additional time to review documents and requested a hearing, which was allegedly ignored. However, the court found that the petitioner had declined a personal hearing and did not submit an effective reply, thus distinguishing this case from one involving a total violation of the rule of audi alteram partem.

4. Availability of Alternative Statutory Remedy:

The court emphasized the availability of an alternative statutory remedy under Section 107 of the CGST/AGST Act, 2017, which allows for an appeal to the Appellate Authority. The court reiterated the principle that writ jurisdiction is not ordinarily exercised when an adequate statutory remedy exists, unless exceptional circumstances are demonstrated. The court concluded that the petitioner had not made out an exceptional case to bypass the statutory remedy.

5. Freezing of the Petitioner's Bank Account:

The petitioner's bank account was frozen by the adjudicating authority, impacting the ability to make the pre-deposit required for filing an appeal. The court acknowledged a similar case where a co-ordinate bench permitted filing an appeal without pre-deposit, subject to the condition that the frozen account had sufficient funds. The court extended this benefit to the petitioner, allowing the filing of an appeal without pre-deposit, provided the frozen account held adequate funds.

Conclusion:

The court disposed of the writ petition, directing the petitioner to avail the statutory remedy of appeal under Section 107 of the CGST/AGST Act, 2017. The court provided conditional relief concerning the pre-deposit requirement, balancing the equities and ensuring the petitioner's access to appellate proceedings.

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