M/S. Swastik Enterprises Through Its Proprietor Sh. Sanjay Gupta vs. Union Of INDIA And Ors.

Facts

The petitioner, M/s. Swastik Enterprises, is challenging an order dated December 21, 2023, which disposed of a Show Cause Notice (SCN) dated September 28, 2023, and raised a demand of Rs. 10,85,557.20/- against them, including penalty. The order was passed under Section 73 of the Central Goods and Services Tax Act, 2017. The petitioner's business had closed in 2020, and they claimed to be unaware of the SCN as it was uploaded only on the GST portal and not communicated otherwise. Consequently, they could not file a reply. The impugned order noted that the petitioner neither filed a reply nor appeared for a personal hearing, despite a reminder being sent via the GST portal, and thus created the demand ex-parte.

Held

The Court held that the impugned order dated December 21, 2023, was liable to be set aside because the petitioner had not been afforded an adequate opportunity to respond to the Show Cause Notice. The primary reason for the ex-parte order was the petitioner's failure to file a reply, which stemmed from their claimed unawareness of the notice due to business closure and portal-only communication. The Court found that since the petitioner had closed their business and did not check the portal, and the notice was only uploaded there, a further opportunity was necessary. The Court reasoned that the principles of natural justice require that a party be given a fair chance to present their case. Therefore, the impugned order was set aside, and the Show Cause Notice was restored to the record of the Adjudicating Authority. The petitioner was granted two weeks to file a reply, after which the Proper Officer was directed to re-adjudicate the SCN after providing a personal hearing and passing a fresh speaking order within the period prescribed under Section 75(3) of the Act. The Court explicitly stated that it had not considered or commented upon the merits of the contentions of either party.

Key Issues

1. Whether the impugned order dated December 21, 2023, passed under Section 73 of the Central Goods and Services Tax Act, 2017, is liable to be set aside due to the petitioner not being afforded adequate opportunity to respond to the Show Cause Notice? Petitioner's contention: The petitioner argued that they were unaware of the Show Cause Notice as it was only uploaded on the GST portal and not communicated through other means, especially since their business had closed in 2020. They contended that this lack of proper communication prevented them from filing a reply and appearing for the personal hearing, thus violating principles of natural justice. Respondents' contention: The respondents, Union of India and others, contended that the petitioner was provided with sufficient and repeated opportunities, including a reminder through the GST portal, to submit a reply and appear for a personal hearing. They argued that the petitioner's failure to do so indicated they had nothing to say, justifying the ex-parte order.