M/S. Maha Minerals vs. The State Of Andhra Pradesh

Held

The Court held that the impugned demand notice was liable to be set aside. The reasoning was based on the observation that the 3rd respondent had issued the demand notice by merely stating that the petitioner's reply was 'not satisfactory', without providing any further details or reasons. Crucially, the petitioner was not afforded an opportunity for a personal hearing, which is a fundamental aspect of natural justice. Therefore, the Court found the action to be arbitrary and in violation of due process. The ratio decidendi is that a demand notice, especially one involving significant financial implications, must be reasoned and must provide an opportunity for a hearing to the affected party. Accordingly, the Court set aside the demand notice and remanded the matter back to the 3rd respondent for a fresh inquiry. The 3rd respondent was directed to consider the petitioner's explanation dated June 11, 2024, afford ample opportunity for a personal hearing, and pass a reasoned order strictly in accordance with law within three months.

Facts

The petitioner, M/s. Maha Minerals, a registered Mineral Dealer License holder and GST registered entity, challenged a demand notice issued by the 3rd respondent. The notice, dated August 20, 2024, and served on October 6, 2024, demanded Rs. 19,02,528/-. This followed a show-cause notice dated May 21, 2024, which alleged breach of Rule 8(1) of APMD Rules, 2017, and penalties under Rule 26(3)(ii) and 34(1) of APMMC Rules, 1966. The allegations pertained to conducting business of 2880 tons of Micaceous Quartz mineral in 2023-2024 without obtaining transit forms, transit passes, and e-Way bills from the Mines Department. The petitioner submitted a detailed explanation on June 11, 2024, along with 91 invoices, 91 transit passes, 91 transit forms, and 91 e-Way bills. However, the 3rd respondent issued the demand notice stating the petitioner's reply was 'not satisfactory' without further elaboration.

Key Issues

1. Whether the impugned demand notice, issued by the 3rd respondent, is illegal, arbitrary, and violative of due process of law, Article 14, 19(1)(g), and 21 of the Constitution of India, and the Principles of Natural Justice, as argued by the petitioner? The petitioner contended that the demand notice was issued without considering their detailed explanation and supporting documents, and without affording an opportunity for a personal hearing, rendering it illegal and arbitrary. They highlighted that the notice merely stated the reply was 'not satisfactory' without providing any specific reasons. The respondents, represented by the learned Assistant Government Pleader, opposed the grant of any relief and prayed for the dismissal of the writ petition.