2023 (2) TMI 90 - HC - GST

Penalty for claiming input tax credit based on bogus tax invoices / debit notes - Section 74 of the TNGST Act, 2017 - sufficient opportunity to send the reply to the show cause notice not provided - principles of natural justice - HELD THAT - This Court is of the considered view that the grounds raised by the petitioner stating that the petitioner has not been granted sufficient opportunity to send the reply to the show cause notice, which is dated 22.11.2022, has to be accepted. Under the impugned order, the reply dated 08.12.2022 has not been considered by the respondents. On a prima facie consideration, the show cause notice sent to the petitioner by the respondents is also bald and cryptic and the exact details of the violations committed by the petitioner have not been disclosed in the said show cause notice. The show cause notice has simply extracted the ingredients of Section 74 of the Act but the same does not disclose the details of the violations committed by the petitioner. This Court is of the considered view that the impugned order has been passed by total non application of mind to the reply dated 08.12.2022 submitted by the petitioner and therefore, the impugned order has to be necessarily quashed and the matter will have to be remanded back to the respondents for fresh consideration on merits and in accordance with law after affording a fair hearing to the petitioner, including granting them the right of personal hearing - Petition disposed off.

Summary

Issues:
Challenge to impugned order under Section 74 of the Tamil Nadu Goods and Services Tax Act, 2017 based on non-application of mind, insufficient opportunity for reply, and lack of details in the show cause notice.

Analysis:
The petitioner challenged an order passed under Section 74 of the TNGST Act, 2017, alleging total non-application of mind, insufficient opportunity for reply, and lack of details in the show cause notice. The petitioner contended that the reply sent on 08.12.2022 was not considered by the respondents, despite requesting additional time to respond to the show cause notice issued on 22.11.2022. The petitioner argued that the show cause notice was bald and cryptic, failing to specify the violations committed. The Court observed that the petitioner had not been granted sufficient opportunity to respond adequately, as evidenced by the communication requesting more time and the subsequent detailed reply uploaded on the web portal but not considered by the respondents. The Court found the show cause notice deficient in disclosing the exact details of the violations, merely citing Section 74 of the Act without specifying the alleged breaches.

The Court held that the impugned order was passed without proper consideration of the petitioner's reply and directed the matter to be remanded back to the respondents for fresh consideration. The Court emphasized the importance of affording a fair hearing to the petitioner, including the right to a personal hearing. Consequently, the impugned order dated 04.01.2023 and the consequential orders dated 05.01.2023 were quashed, and the case was remanded to the 1st respondent for a reevaluation on merits and in accordance with the law within twelve weeks from the date of the order. The writ petition was disposed of without costs, and connected miscellaneous petitions were closed.