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2024 (9) TMI 825 - HC - GSTChallenge to adjudication order in form GST DRC-07 - demand for excess availment Input Tax Credit - short payment of output GST - petitioners had not provided documents in support of its submissions - violation of principles of natural justice - HELD THAT - A plain reading of sub-section 4 of Section 75 of the Act makes it crystal clear that opportunity of hearing must be granted in two situations viz (a) where a request in specific is received in writing from the person chargeable; (b) where any adverse decision is contemplated against such person - This is trite that when language of statute is plain and unambiguous, it should be given effect to irrespective of its consequences. In the instant case whether or not the petitioners have specifically asked for personal hearing, fact remains that the adverse decision was contemplated against the petitioners. In that event, it was obligatory and mandatory on the part of respondents to provide the petitioners opportunity of personal hearing. Admittedly, no opportunity of personal hearing has been provided in both the matters. Resultantly, the decision making process adopted by the respondents is vitiated and runs contrary to the principles of natural justice and statutory requirement of sub-section 4 of Section 75 of GST Act. The impugned proceedings after the stage of reply of show cause notices, in the present case is set-aside.
Issues:
1. Challenge to adjudication order in form GST DRC-07 for excess availment of Input Tax Credit and short payment of output GST. 2. Violation of principles of natural justice in passing the impugned order under Section 74 of the CGST Act/MPGST Act. 3. Requirement of providing opportunity of hearing under Section 75(4) of the CGST Act/MPGST Act. 4. Interpretation of "opportunity of hearing" and "personal hearing" under the Act. 5. Compliance with statutory provisions for opportunity of hearing in the case. 6. Setting aside the impugned proceedings and directing the provision of a hearing to the petitioner. Detailed Analysis: 1. The petition challenged an adjudication order in form GST DRC-07, contesting excess Input Tax Credit and short payment of output GST. The order imposed a demand of Rs. 6,55,69,500/- along with interest and penalty. The petitioners alleged that the order was passed without providing an opportunity of hearing, violating principles of natural justice and fair hearing. 2. The petition argued that the impugned order under Section 74 of the CGST Act/MPGST Act did not consider the representation made by the petitioner before determining the tax, interest, and penalty due. The failure to provide a hearing before passing the order was highlighted as a violation of natural justice principles. 3. Section 75(4) of the CGST Act/MPGST Act mandates the grant of an opportunity of hearing where an adverse decision is contemplated against the taxpayer. The petitioners contended that the impugned order was passed without affording them the opportunity of being heard, contrary to the legal requirement. 4. The interpretation of "opportunity of hearing" and "personal hearing" under the Act was debated. The petitioners argued that the use of the word "or" in the statute indicated that a personal hearing must be provided even if not specifically requested, when an adverse decision is contemplated. The State's counsel, however, contended that "opportunity of hearing" did not necessarily include a "personal hearing." 5. The court analyzed the statutory provisions and previous judgments to determine the scope of providing a hearing to the petitioner. It was concluded that the absence of a personal hearing, despite an adverse decision being contemplated, rendered the decision-making process flawed and contrary to natural justice principles. 6. Consequently, the court set aside the impugned proceedings and directed the respondents to provide a hearing to the petitioner within three months, conducted by an officer other than the one who issued the show cause notice. The court clarified that its decision did not express any opinion on the merits of the case and made no order as to costs.
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