M/S. S.K. Industries And Another vs. Union Of INDIA And 3 Others

Facts

The petitioners, M/s. S.K. Industries and Another, filed a writ petition challenging an Order-in-Original dated January 23, 2025, passed by Respondent No. 3 under Section 74 of the CGST Act, and a show cause notice dated August 25, 2022, issued by Respondent No. 4. The petitioners contended that the respondent authorities failed to provide them with relied-upon documents requested by letter, rendering their defense reply incomplete and preventing them from addressing all issues in the show cause notice. Furthermore, the proprietor of the petitioner company had expired prior to the issuance of the show cause notice, and this information had been communicated to the authorities. The respondent department's counsel repeatedly failed to appear with instructions, despite multiple adjournments and a peremptory order.

Held

The Court held that the impugned order suffered from the vice of violation of the principle of natural justice due to the non-supply of relied-upon documents to the petitioners. The Court reasoned that without these documents, the petitioners could not adequately respond to the allegations in the show cause notice, thereby impeding their right to a fair hearing. The Court also noted the death of the proprietor prior to the issuance of the show cause notice and the petitioner's communication of this fact to the authorities, indicating a procedural lapse in issuing notice to the appropriate legal heirs. Consequently, the Court quashed the impugned Order-in-Original dated January 23, 2025. The Court directed the respondent department to provide the relied-upon documents to the petitioners within four weeks. Upon supply of these documents, the department is to issue a notice for personal hearing and then pass a reasoned order in accordance with the law. The Court also directed that necessary steps be taken by the authorities for the issuance of a show cause notice upon the appropriate persons or legal heirs of the deceased proprietor. No specific finding was recorded on the amount in dispute as it was not elaborated in the judgment.

Key Issues

1. Whether the impugned Order-in-Original and show cause notice are liable to be quashed on the ground of violation of the principles of natural justice, specifically concerning the non-supply of relied-upon documents to the petitioner, as contemplated under Section 74 of the CGST Act? 2. Whether the show cause notice and subsequent proceedings are vitiated due to the death of the proprietor of the petitioner company prior to the issuance of the notice, and the failure of the authorities to issue notice to the appropriate legal heirs? Petitioner's Arguments: The petitioners argued that the non-supply of relied-upon documents violated the principles of natural justice, as it prevented them from filing an effective reply to the show cause notice. They also contended that the proceedings were invalid because the proprietor had died before the show cause notice was issued, and the authorities were informed of this fact but failed to issue notice to the legal heirs. Respondent's Arguments: The respondent department's counsel did not appear to present any arguments or instructions.