2022 (7) TMI 342 - HC - GST

Violation of principles of natural justice - no notice of personal hearing was received by the petitioner - demand u/s 73(2) of the Finance Act, 1994 and penalty of equivalent amount u/s 78 of the Finance Act, 1994 - HELD THAT - It is found that intimation of personal hearing sent to the service provider i.e., the petitioner, was returned undelivered by the postal authorities. Following the same, respondent No.1 passed the impugned order on the basis of available materials. It would be in the interest of justice if the matter is remanded and petitioner is afforded an opportunity of hearing before confirmation of demand and imposition of penalty - Petition disposed off.

Summary

Issues: Challenge to order confirming demand and penalty under Sections 73(2) and 78 of the Finance Act, 1994 due to lack of personal hearing notification.

In this judgment by the Telangana High Court, the challenge was made to an order-in-original dated 02.03.2022, confirming a demand of Rs.3,00,33,961.00 under Section 73(2) of the Finance Act, 1994 and imposing an equivalent penalty under Section 78 of the same Act. The petitioner's advocate argued that the petitioner did not receive a notice of personal hearing, leading to the inability to effectively defend the case. On the contrary, the respondent's counsel stated that the notice of hearing was sent to the address mentioned in the petitioner's GST registration. The court noted that the intimation of personal hearing sent to the petitioner was returned undelivered by the postal authorities, and based on this, the impugned order was passed by respondent No.1. After hearing both counsels, the court decided that justice would be served by remanding the matter, allowing the petitioner an opportunity for a hearing before confirming the demand and imposing the penalty.

The High Court, therefore, set aside the order-in-original dated 02.03.2022 and directed the petitioner to submit a reply within three weeks. If the reply is submitted within the stipulated period, respondent No.1 was instructed to pass a necessary order after granting a proper opportunity for a hearing, including a personal hearing. However, if no reply is filed, respondent No.1 was given the discretion to pass an appropriate order. The writ petition was disposed of accordingly, with any pending miscellaneous applications being closed without any costs being awarded. The judgment highlights the importance of providing a fair opportunity for a hearing before making decisions in matters involving demand confirmation and penalty imposition under the Finance Act, 1994.