2025 (4) TMI 166 - HC - GST

Violation of principles of natural justice - order passed without granting a personal hearing to the petitioners - Challenge to validity and legality of the SCN - recovery of alleged excess ITC availed - HELD THAT - It is not in dispute that the impugned order-in-original is passed in violation of provisions of section 75(4) of the CGST Act as the respondent no.1 was required to grant an opportunity of hearing before passing an adverse order. Therefore as the impugned order-in-original is passed in violation of principles of natural justice only on that ground same is hereby quashed and set aside and the matter is remanded back to the respondent authority to pass fresh de novo order after giving an opportunity of hearing to the petitioners to reconcile Form GSTR 2A with that of Form GSTR 3B for the period under consideration. Such exercise shall be completed within a period of 12 weeks from the date of receipt of a copy of the order. Conclusion - The impugned order-in-original is passed in violation of provisions of section 75(4) of the CGST Act as the respondent no.1 was required to grant an opportunity of hearing before passing an adverse order. Petition disposed off.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

Whether the order-in-original dated 11.10.2023, issued without granting a personal hearing to the petitioners, violates the principles of natural justice and the provisions of section 75(4) of the Central/State Goods and Services Tax Act, 2017 (CGST Act).
Whether the show cause notice dated 31.07.2023 was validly communicated to the petitioners, considering it was uploaded under the Additional Notices/Orders tab on the GST portal instead of the usual View Notices/Orders tab.
Whether the rejection of the appeal by respondent no.2 on the grounds of limitation was justified, given the petitioners' claim of not being properly notified of the order-in-original.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Violation of Principles of Natural Justice and Section 75(4) of the CGST Act

Relevant Legal Framework and Precedents: Section 75(4) of the CGST Act mandates that an opportunity for a personal hearing must be granted before passing an adverse order. This principle is rooted in the broader legal doctrine of natural justice.
Court's Interpretation and Reasoning: The Court noted that the impugned order-in-original was passed ex parte, without granting a personal hearing to the petitioners, thereby violating section 75(4) of the CGST Act and principles of natural justice.
Key Evidence and Findings: The petitioners were not given a personal hearing before the order was passed. The Court found this to be a significant procedural lapse.
Application of Law to Facts: The Court applied the requirements of section 75(4) to the facts, concluding that the lack of a personal hearing invalidated the order.
Treatment of Competing Arguments: The respondents argued that the petitioners had sufficient opportunity to be heard, but the Court found that the procedural requirements were not met.
Conclusions: The Court concluded that the order-in-original was issued in violation of the principles of natural justice and section 75(4) of the CGST Act, warranting its quashing.

Issue 2: Validity of Communication of the Show Cause Notice

Relevant Legal Framework and Precedents: Proper communication of notices is essential for ensuring compliance with procedural fairness and enabling parties to respond appropriately.
Court's Interpretation and Reasoning: The Court examined the method of communication used for the show cause notice and found it problematic that the notice was uploaded under an atypical tab on the GST portal.
Key Evidence and Findings: The notice was uploaded under the Additional Notices/Orders tab, leading to the petitioners' claim that they were unaware of it.
Application of Law to Facts: The Court considered whether the method of communication met the standards of procedural fairness and found it lacking.
Treatment of Competing Arguments: The respondents contended that reminders were sent, but the Court focused on the initial communication's adequacy.
Conclusions: The Court implied that the communication method was insufficient, contributing to the decision to quash the order.

Issue 3: Justification for Rejection of Appeal on Grounds of Limitation

Relevant Legal Framework and Precedents: The CGST Act provides specific time limits for filing appeals, but these are contingent on proper notification of the order.
Court's Interpretation and Reasoning: The Court considered whether the petitioners were properly notified of the order-in-original, affecting the appeal's timeliness.
Key Evidence and Findings: The petitioners claimed they were unaware of the order until their bank account was attached, suggesting a lack of proper notification.
Application of Law to Facts: The Court evaluated the notification process and its impact on the appeal timeline.
Treatment of Competing Arguments: The respondents maintained that the appeal was time-barred, but the Court highlighted notification deficiencies.
Conclusions: The Court found that the appeal's rejection based on limitation was unjustified due to notification issues.

3. SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning: "The impugned order-in-original is passed in violation of provisions of section 75(4) of the CGST Act as the respondent no.1 was required to grant an opportunity of hearing before passing an adverse order."
Core Principles Established: The necessity of granting a personal hearing under section 75(4) of the CGST Act and ensuring proper communication of notices.
Final Determinations on Each Issue: The Court quashed the order-in-original and remanded the matter for a fresh de novo order after granting a personal hearing to the petitioners. The Court did not delve into the merits of the case, focusing instead on procedural fairness.

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