2025 (1) TMI 1420 - HC - GST

Violation of principles of natural justice - no opportunity to participate in the proceedings - challenge to adjudication order - HELD THAT - Admittedly the petitioner had no opportunity to participate in the proceedings as the petitioner was not served with show-cause notice since its registration was cancelled by order dated 02.06.2022. To provide an opportunity to the petitioner to submit reply and to participate in the proceedings impugned orders are set aside and the matter is remitted back to the Adjudicating Authority-respondent No. 1. Since now the petitioner has received the show-cause notice at the request of the petitioner two weeks time is granted to submit reply to the show-cause notice from today. Petition allowed by way of remand.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment are:

1. Whether the petitioner was given a fair opportunity to participate in the adjudication proceedings leading to the assessment order dated 17.02.2024.

2. Whether the issuance of the assessment order and subsequent recovery notices were valid given the circumstances of the petitioner's cancelled GST registration.

3. Whether the petitioner is entitled to have the adjudication proceedings reopened to allow for participation and submission of a response to the show-cause notice.

ISSUE-WISE DETAILED ANALYSIS

1. Fair Opportunity to Participate in Proceedings

Relevant Legal Framework and Precedents: The principles of natural justice require that parties affected by an administrative decision must be given a fair opportunity to present their case. This includes the right to be notified of proceedings and to respond to any allegations or orders that may affect their rights or obligations.

Court's Interpretation and Reasoning: The Court noted that the petitioner had not been served with the show-cause notice due to the cancellation of its GST registration. The petitioner became aware of the assessment order only after accessing the department's portal on 01.10.2024.

Key Evidence and Findings: The Court found that the petitioner did not open the email containing the show-cause notice as the business activities had been discontinued, and the GST registration was voluntarily cancelled on 02.06.2022.

Application of Law to Facts: The Court applied the principles of natural justice, determining that the petitioner was not afforded an opportunity to participate in the proceedings, which led to an ex-parte order.

Treatment of Competing Arguments: The Additional Government Advocate conceded that the petitioner did not have an opportunity to participate in the proceedings and agreed to the matter being remitted back for reconsideration.

Conclusions: The Court concluded that the petitioner should be given an opportunity to respond to the show-cause notice and participate in the proceedings, leading to the setting aside of the impugned orders.

2. Validity of Assessment Order and Recovery Notices

Relevant Legal Framework and Precedents: Administrative orders, such as assessment orders and recovery notices, must be issued in compliance with procedural requirements, including proper notification and opportunity for representation.

Court's Interpretation and Reasoning: The Court found that the assessment order and subsequent recovery notices were issued without the petitioner having the opportunity to respond, rendering them procedurally flawed.

Key Evidence and Findings: The evidence showed that the petitioner was unaware of the proceedings due to the cancellation of GST registration and did not receive the show-cause notice.

Application of Law to Facts: The Court determined that the lack of notification and opportunity to participate invalidated the assessment order and recovery notices.

Treatment of Competing Arguments: The respondent did not contest the procedural irregularity and agreed to the remittance of the matter for fresh adjudication.

Conclusions: The Court quashed the assessment order and recovery notices, allowing the petitioner to participate in the proceedings anew.

3. Entitlement to Reopen Adjudication Proceedings

Relevant Legal Framework and Precedents: The right to a fair hearing is a cornerstone of administrative law, and parties denied this right may seek to have proceedings reopened.

Court's Interpretation and Reasoning: The Court emphasized the importance of ensuring that the petitioner is given a fair chance to present its case, especially in light of the procedural deficiencies identified.

Key Evidence and Findings: The Court acknowledged the petitioner's lack of awareness and opportunity to respond to the show-cause notice as a basis for reopening the proceedings.

Application of Law to Facts: By setting aside the impugned orders, the Court applied the principles of natural justice to allow the petitioner to engage in the adjudication process.

Treatment of Competing Arguments: There were no significant competing arguments as the respondent agreed to the remittance.

Conclusions: The Court granted the petitioner the opportunity to submit a reply to the show-cause notice and participate in the proceedings, directing the adjudicating authority to proceed in accordance with the law.

SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: The Court held that "the petitioner had no opportunity to participate in the proceedings as the petitioner was not served with show-cause notice since its registration was cancelled."

Core Principles Established: The judgment reinforces the principle that parties must be given a fair opportunity to be heard in administrative proceedings, and procedural fairness is essential for the validity of administrative orders.

Final Determinations on Each Issue: The Court allowed the writ petition, quashed the impugned orders, and remitted the matter back to