2025 (1) TMI 1136 - HC - GST

Challenge to impugned order passed by the respondent - violation of principles of natural justice - petitioner seeks an opportunity to explain the discrepancies noted during the inspection of the petitioner s business premises - the petitioner is ready and willing to pay 10% of the disputed tax and that he may be granted one final opportunity before the adjudicating authority to put forth their objections to the proposal to which the learned Government Advocate appearing for the respondent does not have any serious objection. HELD THAT - The impugned order dated 19.07.2024 is set aside. The petitioner shall deposit 10% of the disputed taxes as admitted by the learned counsel for the petitioner and the respondent within a period of four weeks from the date of receipt of a copy of this order. Petition disposed off.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

• Whether the impugned order dated 19.07.2024, passed by the respondent, was made in violation of the principles of natural justice.
• Whether the petitioner should be granted an opportunity to explain the discrepancies noted during the inspection of the petitioner's business premises.
• Whether the petitioner should be allowed to pay 10% of the disputed taxes and be given another chance to present objections before the adjudicating authority.

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 a party be given a fair opportunity to present their case and respond to any allegations or discrepancies noted by the authorities.
• Court's Interpretation and Reasoning: The court noted that the petitioner was issued a show cause notice and reminders, and a personal hearing was offered. However, the impugned order was passed on the premise that the petitioner had not produced supporting documents.
• Key Evidence and Findings: The petitioner contended that they had filed a reply and were willing to provide explanations for the discrepancies if given an opportunity.
• Application of Law to Facts: The court considered the petitioner's willingness to comply with the legal process and the absence of serious objections from the respondent.
• Treatment of Competing Arguments: The court balanced the petitioner's right to a fair hearing against the respondent's duty to enforce tax laws, finding that a remand was appropriate.
• Conclusions: The court concluded that setting aside the impugned order and allowing the petitioner to present their case would be in accordance with the principles of natural justice.

Issue 2: Opportunity to Explain Discrepancies

• Relevant Legal Framework and Precedents: The court referred to a similar case where a matter was remanded for reconsideration, subject to payment of a portion of the disputed taxes.
• Court's Interpretation and Reasoning: The court found that the petitioner's willingness to pay 10% of the disputed taxes and the absence of serious objections from the respondent justified granting another opportunity.
• Key Evidence and Findings: The petitioner cited a recent judgment where a similar approach was taken, and the respondent did not object to this proposal.
• Application of Law to Facts: The court applied the precedent of remanding cases for reconsideration, subject to partial payment of disputed taxes, to the present case.
• Treatment of Competing Arguments: The court considered the balance between ensuring compliance with tax obligations and allowing the petitioner to address discrepancies.
• Conclusions: The court decided to remand the matter, allowing the petitioner to pay 10% of the disputed taxes and present objections.

3. SIGNIFICANT HOLDINGS

• Preserve Verbatim Quotes of Crucial Legal Reasoning: "The impugned order dated 19.07.2024 is set aside... the petitioner shall deposit 10% of the disputed taxes... within a period of four weeks from the date of receipt of a copy of this order."
• Core Principles Established: The judgment reinforces the principle that parties should be given a fair opportunity to respond to discrepancies and that partial payment of disputed taxes can be a condition for remand.
• Final Determinations on Each Issue: The court set aside the impugned order, required the petitioner to pay 10% of the disputed taxes, and allowed the petitioner to submit objections and supporting documents within a specified timeframe.

The court's decision reflects a balanced approach, ensuring compliance with tax laws while upholding the principles of natural justice by allowing the petitioner a fair opportunity to address the noted discrepancies. The judgment also emphasizes the importance of partial payment as a condition for remanding cases, aligning with precedents that promote fairness and accountability in tax adjudication processes.