2025 (4) TMI 93 - HC - GST

Service of order - Challenge to order passed u/s 73 of the Act and summary of the order - impugned orders were merely uploaded in the GST Portal and were unnoticed by the petitioner - violation of principles of natural justice - HELD THAT - There is no dispute on the aspect that notices which culminated in the impugned orders were merely uploaded in the GST portal which were unnoticed by the petitioner as the petitioner had no occasion to view the Portal then and there hence the petitioner could not file reply or appear for the personal hearing. However the respondent passed the impugned orders without even affording any opportunity of hearing to the petitioner which are nothing but ex parte orders as the same suffer from violation of principles of natural justice. Once the orders are passed in violation of principles of natural justice this Court cannot impose any condition requiring the petitioner to make any deposit however since the petitioner themselves have voluntarily come forward to deposit 25% of the disputed tax this Court is inclined to set aside the impugned orders subject to fulfilment of conditions imposed. The matters are remanded to the respondent for fresh consideration.

Summary

ISSUES PRESENTED and CONSIDERED

The primary issue presented and considered in this judgment is whether the orders passed by the respondent under Section 73 of the Act, without providing the petitioner an opportunity for a hearing, violate the principles of natural justice. Additionally, the court considered whether the petitioner's readiness to deposit 25% of the disputed tax impacts the decision to set aside the orders and remand the matter for fresh consideration.

ISSUE-WISE DETAILED ANALYSIS

Violation of Principles of Natural Justice

Relevant Legal Framework and Precedents: The principles of natural justice are fundamental to administrative law, requiring that parties be given a fair opportunity to present their case. Section 73 of the Act pertains to the determination of tax not paid or short-paid, and mandates adherence to these principles during proceedings.

Court's Interpretation and Reasoning: The Court found that the respondent issued orders without providing the petitioner an opportunity for a hearing, as the notices were merely uploaded on the GST Portal and went unnoticed by the petitioner. This failure to ensure the petitioner was heard constituted a violation of natural justice.

Key Evidence and Findings: The Court noted that the petitioner did not receive the notices due to their mere upload on the GST Portal, which the petitioner did not have the occasion to check regularly. Consequently, the petitioner was unable to file a reply or appear for a personal hearing.

Application of Law to Facts: Applying the principles of natural justice, the Court determined that the orders were ex parte and invalid due to the lack of a fair hearing. The Court emphasized that any administrative action affecting rights must comply with these principles.

Treatment of Competing Arguments: The respondent did not contest the petitioner's claim regarding the unnoticed upload of notices. The Additional Government Pleader acknowledged the petitioner's willingness to deposit 25% of the disputed tax, which influenced the Court's decision to remand the matter.

Conclusions: The Court concluded that the orders were passed in violation of natural justice principles and thus must be set aside. The matter was remanded to the respondent for fresh consideration, with instructions to provide the petitioner a fair opportunity to be heard.

Petitioner's Willingness to Deposit 25% of Disputed Tax

Relevant Legal Framework and Precedents: While the principles of natural justice do not inherently require a financial deposit, the petitioner's voluntary offer to deposit a portion of the disputed tax was considered by the Court in its decision-making process.

Court's Interpretation and Reasoning: The Court noted the petitioner's readiness to deposit 25% of the disputed tax as a gesture of good faith, which was acknowledged by the respondent's counsel. This willingness was factored into the Court's decision to remand the matter without imposing additional conditions.

Key Evidence and Findings: The petitioner's offer to deposit the tax was seen as a proactive step towards resolving the dispute, facilitating the Court's decision to allow the petition and remand the case.

Application of Law to Facts: The Court applied the principle that while a deposit is not mandatory, the petitioner's voluntary offer demonstrated a commitment to resolving the issue, which justified the remand for fresh consideration.

Treatment of Competing Arguments: The respondent did not oppose the petitioner's offer, and the Court found no reason to impose further conditions, given the agreement between the parties.

Conclusions: The Court concluded that the petitioner's offer to deposit 25% of the disputed tax supported the decision to set aside the orders and remand the matter for a fair hearing.

SIGNIFICANT HOLDINGS

The Court held that the orders passed by the respondent were in violation of the principles of natural justice due to the lack of a fair hearing. The Court stated, "once the orders are passed in violation of principles of natural justice, this Court cannot impose any condition requiring the petitioner to make any deposit." This established the core principle that administrative actions affecting rights must comply with natural justice, and any deviation renders such actions invalid.

The final determination was to set aside the impugned orders and remand the matters to the respondent for fresh consideration. The Court directed the respondent to issue a clear 14-day notice for a personal hearing, ensuring compliance with natural justice principles. The petitioner was granted liberty to deposit 25% of the disputed tax, as voluntarily offered, within two weeks from the receipt of the order, and subsequently file a reply with supportive documents.