2024 (7) TMI 369 - HC - GST

Violation of principles of natural justice - petitioner's business was discontinued - SCN and impugned order were uploaded on the GST portal but not communicated to the petitioner through any other mode - mismatch between the petitioner's GSTR 3B returns and the auto populated GSTR 2A - HELD THAT - The tax proposal was confirmed because the petitioner did not reply to the show cause notice or attend the personal hearing. Since it is asserted that the petitioner could not reply on account of being aware of proceedings, the interest of justice warrants that the petitioner be provided an opportunity to contest the tax demand on merits, albeit by putting the petitioner on terms. The impugned order dated 22.03.2024 is set aside on condition that the petitioner remits 10% of the disputed tax demand in cash within a period of two weeks from the date of receipt of a copy of this order. Within the said period, the petitioner is permitted to submit a reply to the show cause notice - petition disposed off.

Summary

Issues involved:
Challenge to order in original on grounds of breach of principles of natural justice in a writ petition.

Analysis:

1. Breach of Principles of Natural Justice:
The judgment revolves around a writ petition challenging an order in original dated 22.03.2024 on the grounds of a breach of principles of natural justice. The petitioner alleged that their business was discontinued, and the show cause notice along with the impugned order were uploaded on the GST portal but not communicated through any other means. The petitioner sought relief based on the lack of communication and the consequential inability to respond to the tax proposal. The learned counsel for the petitioner argued that the tax proposal related to a mismatch between the petitioner's GSTR 3B returns and the auto-populated GSTR 2A, and if given an opportunity, the petitioner could reconcile the discrepancy. The court acknowledged the importance of principles of natural justice and directed that the petitioner should be given a chance to contest the tax demand on merits, subject to certain conditions.

2. Compliance with Natural Justice and Opportunity to Contest:
Mr. Sai Srujan Tayi, the learned senior standing counsel for the respondent, contended that the principles of natural justice were adhered to in the issuance of notices and the impugned order. He highlighted that the respondent had issued notices in Form ASMT 10 and a show cause notice before passing the impugned order. However, upon examining the impugned order, it was noted that the tax proposal was confirmed due to the petitioner's failure to respond to the show cause notice or attend the personal hearing. The court recognized that the petitioner's inability to reply was due to not being aware of the proceedings. In the interest of justice, the court directed that the petitioner should be given an opportunity to contest the tax demand on merits, with the condition of remitting 10% of the disputed tax demand.

3. Setting Aside the Impugned Order and Providing Opportunity:
The judgment set aside the impugned order dated 22.03.2024 on the condition that the petitioner remits 10% of the disputed tax demand within two weeks from receiving a copy of the order. The petitioner was granted the opportunity to submit a reply to the show cause notice within the specified period. Upon receipt of the reply and confirmation of the 10% remittance, the respondent was directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and subsequently issue a fresh order within three months. The writ petition was disposed of based on these terms, with no costs imposed, and related motions were closed accordingly.