2022 (12) TMI 517 - HC - GST

Principles of Natural Justice - validity of action of the respondent authority on the ground of non-availment of opportunity of hearing - HELD THAT - Considering the fact that that notice itself is quite cryptic and non-sustainable, without entering into the merit following the decision, this petition would warrant interference of this decision categorically directs the authority concerned to be specific and ensure to avail opportunity of hearing. The show cause notice must contain the requisite details for the person to meet with the challenges. While quashing the notice, it is being directed that the authority concerned would be permitted to issue the detailed notice and avail the opportunity of hearing to the otherside. Petition allowed.

Summary

Issues:
Petition challenging respondent authority's action due to lack of opportunity of hearing and cryptic show cause notice leading to registration suspension.

Analysis:
1. Opportunity of Hearing Issue:
The petitioner sought relief to quash the show cause notice dated 24.2.2022 and requested a stay on the suspension of registration. The Court issued a notice for final disposal on 27.7.2022, directing against the show-cause notice under the Goods and Services Tax Act, 2017. The respondent, through an affidavit-in-reply, acknowledged issuing the notice and suspending the registration to protect state revenue interests due to alleged wrongful Input Tax Credit availed by the petitioner.

2. Content of Show Cause Notice:
The show cause notice for registration cancellation was issued based on information indicating potential violations, including wrongful input tax credit utilization. The respondent alleged that the petitioner availed credit from traders with canceled registrations. The petitioner, represented by Mr. Chirag Prajapati, raised jurisdictional, constitutional, and natural justice concerns, citing the Aggarwal Dyeing case.

3. Legal Arguments and Court's Consideration:
The petitioner argued extensively, emphasizing the need for a detailed notice and an opportunity to contest the matter. The respondent contended that registration suspension aimed to protect revenue interests and could be restored based on the notice's sustainability after the petitioner's reply. The Court, after hearing both sides and reviewing the material, noted the suspension of registration and the lack of specific details in the show cause notice.

4. Judicial Decision and Directions:
Referring to the Aggarwal Dyeing case, the Court emphasized the importance of detailed notices to avoid unnecessary litigation. The Court found the cryptic notice non-sustainable and directed the authority to issue a detailed notice, provide an opportunity for a hearing, and decide the matter on merit. The Court allowed the petition, quashed the notice, and directed the authorities to issue a comprehensive notice within two weeks for a fair hearing and decision based on merit, ensuring procedural fairness and legal compliance.

This detailed analysis highlights the key aspects of the judgment, including the issues raised, legal arguments presented, and the Court's decision and directions, ensuring a comprehensive understanding of the case.