Velplex Industries vs. The State Tax Officer (Intelligence)

Held

The Court allowed the writ petition, setting aside Exts.P2 and P3. The primary finding was that there was merit in the petitioner's contention that the respondent could not have proceeded to pass final orders on 17.12.2019 after granting an adjournment for two weeks based on a request filed on 05.12.2019, as the two-week period would have expired on 19.12.2019. Even considering the respondent's argument that the adjournment was from 02.12.2019, the Court noted that the orders themselves did not indicate this, appearing to grant the adjournment from 05.12.2019. The Court explicitly stated it was not expressing any opinion on the merits of the penalty proposals. The matter was remitted to the respondent for passing fresh orders in accordance with law. The petitioner was directed to appear on 22.07.2024, and the respondent was to finalize the matter thereafter, with the petitioner directed to cooperate and not cause delays. No issue was expressly left undecided.

Facts

The petitioner, Velplex Industries, filed a writ petition challenging two orders, Exts.P2 and P3, issued by the State Tax Officer (Intelligence), Squad No.II, State Goods & Service Tax Department, Kerala. These orders imposed penalties under Section 74 read with Section 122(1) of the CGST/SGST Acts, 2017, for the tax periods 2017-18 and 2018-19 respectively. The petitioner contended that after a revised notice was issued on 27.11.2019, they appeared before the officer and requested a three-week adjournment on 05.12.2019. The officer granted a two-week adjournment. However, the impugned orders were issued on 17.12.2019, which the petitioner argued was before the expiry of the granted two-week period, thus violating principles of natural justice.

Key Issues

1. Whether the impugned orders, Exts.P2 and P3, imposing penalties under Section 74 read with Section 122(1) of the CGST/SGST Acts, 2017, were issued in violation of the principles of natural justice by not affording the petitioner adequate opportunity to present their case, specifically concerning the granted adjournment period. Petitioner's Contention: The petitioner argued that the orders were liable to be set aside as they were issued on 17.12.2019, shortly after a two-week adjournment was granted from 05.12.2019, meaning the adjournment period would not have expired until 19.12.2019. This premature issuance denied them a proper opportunity to be heard. Respondent's Contention: The respondent argued that the adjournment requests were undated, and the two-week adjournment was granted from 02.12.2019, making the finalization on 17.12.2019 permissible. They further contended that any grievance should be addressed through the appellate authority under Section 107 of the CGST/SGST Acts, and no grounds existed for interference under writ jurisdiction.