2025 (1) TMI 411 - HC - GST

Violation of principles of natural justice - impugned order came to be passed without considering the petitioner's request for time - HELD THAT - The impugned order dated 07.08.2024 is set aside and the petitioner shall deposit 10% of the disputed tax within a period of four weeks from the date of receipt of a copy of this order. On complying with the above condition, the impugned order of assessment shall be treated as show cause notice and the petitioner shall submit its objections within a period of four weeks from the date of receipt of a copy of this order along with supporting documents/material. If any such objections are filed, the same shall be considered by the respondent and orders shall be passed in accordance with law after affording a reasonable opportunity of hearing to the petitioner. If the above deposit is not paid or objections are not filed within the stipulated period, i.e., four weeks respectively from the date of receipt of a copy of this order, the impugned order of assessment shall stand restored. Petition disposed off.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

• Whether the impugned order dated 07.08.2024 violates the principles of natural justice due to the alleged failure to consider the petitioner's request for additional time.
• Whether the petitioner is entitled to relief by having the matter remanded back to the adjudicating authority, subject to conditions similar to those in the precedent case cited.
• Whether the respondents' actions in proceeding with recovery and garnishee proceedings before the expiry of the appeal period were justified.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Violation of Principles of Natural Justice

• Relevant Legal Framework and Precedents: The principles of natural justice require that parties be given a fair opportunity to present their case. The petitioner cited a recent judgment (Sree Manoj International Vs. Deputy State Tax Officer) where a similar situation resulted in a remand.
• Court's Interpretation and Reasoning: The court considered whether the petitioner was given adequate opportunity for a hearing. Despite multiple notices for a personal hearing, the petitioner did not avail themselves of these opportunities.
• Key Evidence and Findings: Notices for a personal hearing were issued on 05.07.2024, 23.07.2024, and 30.07.2024. The petitioner requested additional time but did not attend any scheduled hearings.
• Application of Law to Facts: The court weighed the petitioner's failure to attend hearings against the claim of insufficient opportunity, ultimately finding that the petitioner had sufficient notice.
• Treatment of Competing Arguments: The petitioner's argument of insufficient opportunity was countered by the respondent's evidence of multiple notices. The court found the respondents' position more compelling.
• Conclusions: The court concluded that the impugned order did not violate principles of natural justice but acknowledged procedural fairness concerns.

Issue 2: Remand and Conditions

• Relevant Legal Framework and Precedents: The court referenced a similar case where the matter was remanded subject to a 10% payment of disputed taxes.
• Court's Interpretation and Reasoning: The court considered the petitioner's willingness to comply with the precedent condition of paying 10% of the disputed tax.
• Key Evidence and Findings: The petitioner expressed readiness to deposit 10% of the disputed tax, aligning with the precedent case.
• Application of Law to Facts: The court applied the precedent by setting aside the impugned order and remanding the case, conditional on the 10% payment.
• Treatment of Competing Arguments: The respondent did not object to the proposed remand and condition, which facilitated the court's decision.
• Conclusions: The court remanded the matter, allowing the petitioner to submit objections and supporting documents, contingent upon the 10% deposit.

Issue 3: Recovery and Garnishee Proceedings

• Relevant Legal Framework and Precedents: The legality of recovery actions before the expiry of the appeal period was considered.
• Court's Interpretation and Reasoning: The court found the respondents' actions premature, given the petitioner's pending appeal rights.
• Key Evidence and Findings: The respondents initiated recovery and garnishee proceedings before the appeal period lapsed.
• Application of Law to Facts: The court determined that the premature actions warranted setting aside the impugned order.
• Treatment of Competing Arguments: The respondents' actions were not defended robustly, leading to the court's decision to favor the petitioner.
• Conclusions: The court ordered the withdrawal of garnishee proceedings and the lifting of bank attachments upon the petitioner's compliance with conditions.

3. SIGNIFICANT HOLDINGS

• Preserve Verbatim Quotes of Crucial Legal Reasoning: "The impugned order dated 07.08.2024 is set aside and the petitioner shall deposit 10% of the disputed tax within a period of four weeks from the date of receipt of a copy of this order."
• Core Principles Established: The court reinforced the necessity of adhering to principles of natural justice and procedural fairness, allowing for remedial measures when these are compromised.
• Final Determinations on Each Issue: The court set aside the impugned order, remanded the case for reconsideration, and imposed conditions for the petitioner's compliance, ensuring procedural fairness.

In conclusion, the judgment underscores the importance of procedural fairness and adherence to natural justice principles, providing a framework for remand and reconsideration when these principles are at risk of being compromised.