M/S Ess Pee Industries Through Its Sole Proprietor vs. State Of Punjab And Another
Original PDF →Facts
M/s Ess Pee Industries (the petitioner) was engaged in trading iron and steel goods and was registered under the CGST/PGST Act. Due to business unviability, the petitioner applied for and obtained cancellation of its registration on April 26, 2023. Subsequently, on May 8, 2024, the petitioner received Form GST DRC-01A from the Excise and Taxation Officer-cum-State Tax Officer, Ward No.7, Ludhiana, indicating a tax liability of Rs.39,91,430/- for the tax period April 2019 - March 2020. A show cause notice dated May 28, 2024, under Section 74 of the CGST/PGST Act was then issued, proposing a demand of Rs.42,36,967/-. Although the notice indicated a reply due date of June 28, 2024, the personal hearing details were left blank. The petitioner submitted its response on June 25, 2024, requesting a personal hearing, but no update was received. Despite this, an order dated August 30, 2024, was passed, creating a demand of Rs.43,39,370/-.
Held
The Court held that the impugned order dated August 30, 2024, was passed in violation of Section 75(4) of the CGST/PGST Act, which mandates providing an opportunity of hearing when a written request is received or when an adverse decision is contemplated. The petitioner had explicitly requested a personal hearing in its reply to the show cause notice and through the web portal. The respondents, through the Additional Advocate General, conceded that the order was indefensible due to this violation. Consequently, the Court found it unnecessary to delve into the merits of the case or refer to other provisions or case law. The impugned order was set aside, and the matter was remitted to respondent No.2 for fresh adjudication in accordance with the law, ensuring compliance with the principles of natural justice. The operative direction was to pass orders afresh.
Key Issues
1. Whether the impugned order dated August 30, 2024, passed by respondent No.2, is liable to be quashed for being in violation of the principles of natural justice, specifically concerning the denial of a personal hearing, as contemplated under Section 75(4) of the CGST/PGST Act? Petitioner's Arguments: The petitioner contended that the impugned order was erroneous and unsustainable as it was passed in violation of the principles of natural justice. They argued that Section 75(4) of the CGST/PGST Act mandates the Adjudicating Authority to provide an opportunity of hearing when a written request is received or when an adverse decision is contemplated. The petitioner highlighted that they had specifically requested a personal hearing in their reply to the show cause notice and via the web portal, but this request was ignored. They relied on the provisions of Sections 74 and 75(4) of the CGST/PGST Act. Respondents' Arguments: The learned Additional Advocate General for the respondents fairly conceded that the order dated August 30, 2024, was passed in apparent violation of Section 75(4) of the CGST/PGST Act and was therefore indefensible. They agreed that the matter needed to be re-examined by the authorities.
Sections Cited
Section 74, Section 75(4), Section 73(5)
AI-generated summary — verify with the full judgment below
CWP-3956-2025(O&M) 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CWP-3956-2025(O&M) Date of decision: 27.02.2025 M/s Ess Pee Industries … Petitioner Versus State of Punjab and another … Respondents CORAM: HON’BLE MR. JUSTICE ARUN PALLI HON’BLE MRS. JUSTICE SUDEEPTI SHARMA Present: Mr. Dayyar Singla, Advocate, and Mr. Rohit Gupta, Advocate, for the petitioner. Mr. Saurabh Kapoor, Additional Advocate General, Punjab. *** ARUN PALLI, J. (Oral) Petitioner (M/s Ess Pee Industries) prays for a Certiorari, to quash the show cause notice dated May 28, 2024, issued under Section 74 of the Central Goods and Services Tax Act, 2017, and Punjab Goods Services Tax Act, 2017 (‘CGST/PGST Act’), as also the order dated August 30, 2024, whereby a demand of Rs.43,39,370/- has since been created. Learned counsel for the petitioner submits that the petitioner was engaged in the trading of iron and steel goods. For the purpose of registration under the CGST/PGST Act, it was registered vide GSTIN: 03ARFPK8637D1ZY (P-1). However, due to multiple reasons, it became unviable for the petitioner to continue its business. Consequently, an application, dated April 22, 2023, for cancellation of its registration, was submitted on the web portal of the Department. And, the registration was cancelled on April 26, 2023 (P-3). However, on May 8, 2024, the petitioner was issued Form GST DRC-01A, under Section 73(5) of the CGST/PGST Act, by Excise and Taxation Officer-cum-State Tax Officer, Ward No.7, Ludhiana 1 (Punjab). Vide which, the petitioner was informed that, for the tax period April 2019 - March 2020, a liability of Rs.39,91,430/- had been ascertained by the RAJAN KUMAR 2025.04.03 18:57 I am approving this document
CWP-3956-2025(O&M) 2 Department. It is submitted that since the petitioner did not accept the amount of tax/interest calculated by the authorities, it was served with a show cause notice dated May 28, 2024, under Section 74 of the CGST/PGST Act, proposing a demand of Rs.42,36,967/- (P-5). And, with reference thereto, he submits that although under the caption “Details of personal hearing and due date of file reply”, the date by which the reply was to be submitted by the petitioner was indicated as June 28, 2024, however, the date, time, and venue to grant a personal hearing were left blank (NA). But, the petitioner submitted its response to the show cause notice on June 25, 2024. And, while uploading the same on the web portal, the petitioner specifically requested respondent No.2 to provide a personal hearing before finalizing the demand. It is submitted that the petitioner was all through pursuing its cause diligently, but no hearing update was received on the portal with respect to personal hearing. Rather, vide order dated August 30, 2024, under Section 74 of the CGST/PGST Act, as indicated earlier, a demand of Rs.43,39,370/- has since been was finalized. It is urged that apparently the impugned order dated August 30, 2024, is erroneous and unsustainable, for having been passed in violation of the principles of natural justice. With reference to the provisions of Sections 74 & 75(4) of the CGST/PGST Act, it is submitted that the Adjudicating Authority is under a statutory obligation to provide an opportunity of hearing, when a request is received in writing from the person chargeable with tax or penalty, or when any adverse decision is contemplated against such person. Again, with reference to the reply, dated June 5, 2024, to the show cause notice, he asserts that the petitioner had specifically requested the authorities for a personal hearing before adjudicating the show cause notice. Similarly, he also drew our attention to the screenshot from the portal, evidencing that the authorities were requested to grant a personal hearing to the petitioner. But to no avail. Served with the advance copy of the petition, Mr. Saurabh Kapoor, learned Additional Advocate General, Punjab, is present in Court on behalf of the respondents. RAJAN KUMAR 2025.04.03 18:57 I am approving this document
CWP-3956-2025(O&M) 3 The factual position, as indicated above, is not disputed by learned Additional Advocate General, Punjab. Rather, he, as always, fairly submits, for the order dated August 30, 2024, has been passed in apparent violation of Section 75(4) of the CGST/PGST Act, the same is indefensible. Accordingly, he submits, for the matter in issue would have to be re-examined by the authorities, the impugned order dated August 30, 2024, be set aside. In the wake of the position sketched out above, and the statement made by learned Additional Advocate General, Punjab, in particular, we are not required to delve any further into the merits or refer to the provisions of Sections 74 & 75 of the CGST/PGST Act, or even the case law on the subject. Accordingly, the impugned order dated August 30, 2024 (P-8) is set aside, and the matter is remitted to respondent No.2, to pass orders afresh in accordance with law. The petition is disposed of, in the above terms. ( Arun Palli )
Judge 27.02.2025 Ak Sharma/Rajan ( Sudeepti Sharma ) Judge Whether speaking / reasoned: YES/NO Whether Reportable: YES/NO RAJAN KUMAR 2025.04.03 18:57 I am approving this document
Reproduced from the public record of the Punjab and Haryana High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.