2024 (9) TMI 1389 - HC - GST

Challenge to bank attachment notice - impugned order passed without even granting an opportunity of personal hearing to the petitioner, nor calling for any reply from the petitioner - violation of principles of natural justice - HELD THAT - Initially, petitioner herein was registered under the provisions of the Service Tax Act, during which period, the petitioner has appointed an Auditor as his Authorized representative in respect of Service matters; however, subsequent to the introduction of GST regime, though the petitioner got registered under the provisions of the GST Act and also shifted their place of business from AGT Business Park, Avinashi Road, Coimbatore to PMR Layout, Second Street, Poongothai Nagar, Civil Aerodrome post Citra, Coimbatore, the petitioner failed to give authorisation as regards GST matters, during which point of time, the show cause notice was served on the petitioner s Auditor and for the reasons best known to the Auditor, the same was failed to be brought to the notice of the petitioner. Therefore, the petitioner was not in a position either to give reply to the show cause notice nor appear before the first respondent for the personal hearing. It was only owing to the fault on the part respondent-Department, the petitioner became unaware of the entire proceedings and was not in a position to respond to such notices, this Court is of the view that the petitioner is entitled to the relief sought for in both the Writ Petitions. The Order-in-Original is set aside and the matter is remanded back to the first respondent for fresh consideration, however, the same is subject to the payment of 7.5% of the disputed tax by the petitioner within a period of four weeks from the date of receipt of a certified copy of this order - Petition allowed by way of remand.

Summary

Issues:
Challenge to Order-in-Original and bank attachment notice - violation of principles of natural justice.

Analysis:
The Writ Petitions challenged the Order-in-Original dated 23.09.2022 passed by the first respondent and the consequential bank attachment notice dated 20.04.2024, seeking to quash them. The petitioner, represented by M/s. S.P. Sri Harini, argued that they were unaware of the impugned order due to delayed receipt and lack of prior notices, leading to a violation of natural justice principles. On the other hand, Mr. T. Ramesh Kutty, Senior Standing Counsel for the first respondent, defended the order stating that the show cause notice was served on the petitioner's Auditor, who failed to respond, justifying the subsequent actions taken. The petitioner contended that the Auditor was only authorized for Service Tax matters, not GST issues, hence the lack of awareness and inability to respond.

The petitioner further explained that after transitioning to the GST regime and changing business premises, they had duly informed the authorities. However, the impugned order was sent to the old address, causing the petitioner to remain unaware of the proceedings. The petitioner expressed readiness to deposit 7.5% of the disputed tax if the order was set aside for reconsideration. The Senior Standing Counsel proposed a 50% deposit if the matter was remanded.

Upon review, the Court found that the petitioner's lack of authorization for GST matters and the fault of the respondent-Department in sending notices to the old address resulted in the petitioner's unawareness and inability to respond. Consequently, the Court set aside the Order-in-Original and remanded the matter for fresh consideration, subject to the petitioner depositing 7.5% of the disputed tax within four weeks. The petitioner was directed to file a reply within two weeks of payment, and the respondent was instructed to grant a personal hearing and pass necessary orders. Additionally, the petitioner was to approach the bank with proof of payment for de-freezing the account.

In conclusion, both Writ Petitions were allowed with the specified directions, and no costs were awarded. Connected Miscellaneous Petitions were closed as a result of the judgment.