Taiyo Nippon Sanso INDIA Private Limited vs. Union Of INDIA

Held

The Court held that the impugned rectification order dated 20th October 2022 was liable to be quashed and set aside. The Court reasoned that the order was passed without affording the Petitioner an opportunity of being heard and without considering their submissions, thus violating principles of natural justice. The Court acknowledged the State GST authority's fair submission to remand the proceedings for a fresh hearing. Consequently, the Court quashed the impugned order and remanded the proceedings to Respondent No. 4 for de novo consideration. Respondent No. 4 was directed to issue a fresh show cause notice within two weeks, grant a personal hearing to the Petitioner within two weeks thereafter, and pass a reasoned and speaking order within three months. All contentions of the parties were expressly kept open. The petition was disposed of in these terms.

Facts

The Petitioner, Taiyo Nippon Sanso India Pvt. Ltd., a GST-registered company, is challenging a rectification order dated 20.10.2022 passed by Respondent No. 4 (State GST authority). The dispute arose from an audit initiated by Respondent No. 3 (Central GST authority) for the financial year 2017-18. Respondent No. 4 issued notices and an order dated 21.04.2022 under Section 73(9) of the CGST/MGST Act. The Petitioner contended that the State GST assessment should be dropped as a Central GST audit was already underway for the same period. Subsequently, the Petitioner filed an application for rectification and submitted replies. However, Respondent No. 4 passed the impugned rectification order on 20.10.2022, rectifying a taxpayer name error but also raising an additional demand beyond the initial show cause notice, without granting a personal hearing.

Key Issues

1. Whether the rectification order dated 20.10.2022, passed by Respondent No. 4, is liable to be quashed and set aside for being passed without granting an opportunity of being heard to the Petitioner and without considering its submissions, thereby violating principles of natural justice? Petitioner's Arguments: The Petitioner argued that the impugned rectification order was passed without providing an opportunity for a personal hearing and without considering the legal and factual submissions made. They contended that the proceedings should be remanded to the Designated Authority for a fresh hearing. The Petitioner relied on the principle that orders affecting substantial rights must be preceded by due process, including a hearing. Revenue's Arguments: The State GST authority (Respondent No. 4) fairly submitted that the proceedings could be remanded for a fresh hearing after giving the Petitioner an opportunity to be heard.