M/S Jupiter Exports vs. Commissioner Of GST

Held

The Court held that the impugned order dated March 25, 2021, was passed in violation of the principles of natural justice, as the petitioner was admittedly not granted a personal hearing. The Court found that the respondent had not filed a counter affidavit to traverse the petitioner's averments, thereby admitting them. The Court rejected the respondent's contention that the petitioner had to show prejudice, stating that the denial of a hearing itself vitiates the order. The Court also noted that the respondent's conduct in delaying the proceedings for nearly two years was improper and a waste of judicial time. The Court relied on the principle that the availability of an alternative remedy does not automatically oust the High Court's writ jurisdiction, especially when there is a clear violation of statutory provisions and natural justice. The Court set aside the impugned demand order and remanded the matter to the respondent to pass a fresh order after affording the petitioner a due opportunity to be heard. The Court also imposed a cost of ₹5,000 on the respondent for wasting judicial time.

Facts

The petitioner, M/s Jupiter Exports, filed a writ petition challenging a demand order dated March 25, 2021, passed by the Commissioner of GST under Section 74(9) of the CGST Act. The demand order raised a total demand of ₹6,67,74,062, comprising tax, interest, and penalty for the period April 2018 to March 2019. The petitioner's primary contention was that the order was passed in violation of natural justice principles, as no personal hearing was granted. The procedural history involved multiple adjournments, delays in filing the counter affidavit by the respondent, and eventual submission by the respondent that they would rely on existing documents. The court noted the respondent's conduct in delaying the proceedings for nearly two years.

Key Issues

1. Whether the demand order dated March 25, 2021, passed under Section 74(9) of the CGST Act is liable to be set aside for violation of the principles of natural justice due to the denial of a personal hearing to the petitioner? Petitioner's Arguments: The petitioner argued that the impugned order was passed without affording any opportunity of personal hearing, which is a violation of natural justice. They relied on judgments from the Madras High Court (Amman Match Company) and Bombay High Court (BA Continuum India Pvt. Ltd., DBOI Global Service Pvt. Ltd.). The petitioner also cited a circular dated March 10, 2017, mandating at least three opportunities for personal hearing. Furthermore, they contended that the order was non-speaking and failed to consider their written reply to the show cause notice. Respondent's Arguments: The respondent argued that the applicability of natural justice principles is not absolute and that the petitioner must demonstrate real prejudice. They contended that the case involved admitted violations and that the petitioner had nothing further to argue beyond their reply. The respondent claimed that the proprietor's admission of guilt and telephonic conversations were considered equivalent to a personal hearing, and further hearings would be dilatory tactics. They also argued that the circular dated March 10, 2017, was not binding and that the petitioner had an alternative remedy of appeal.