M/S.M.B.M. Steels vs. The Assistant Commissioner (St)

Held

The Court held that the impugned order dated 01.08.2022 was liable to be set aside due to a violation of the principles of natural justice. The Court found that the petitioner had not been afforded a reasonable opportunity of being heard, particularly a personal hearing, to present documents that could have disproved the respondent's claim that the supplier, Sun Steels, was non-existent. The Court noted that the respondent did not refute the petitioner's assertion that Sun Steels is a registered entity under GST and has paid taxes on the supplies made to the petitioner. The Court reasoned that had the petitioner been given a personal hearing, they could have clarified this crucial fact. Therefore, the Court quashed the impugned order and remitted the matter back to the respondent for fresh consideration. The petitioner was directed to submit copies of the invoice, e-way bill, and payment details within one week, and the respondent was directed to pass fresh orders within six weeks thereafter.

Facts

The petitioner, M/s.M.B.M.Steels, a hardware dealer, filed a writ petition challenging an order dated 01.08.2022 issued by the Assistant Commissioner (ST), Tuticorin. The order, pertaining to the tax period 2018-19, demanded Rs.71,604/- along with a penalty of a like amount. This demand was based on the finding that the petitioner had availed input tax credit of Rs.71,604/- (CGST: Rs.35,802/- + SGST: Rs.35,802/-) from a non-existent taxpayer, Sun Steels. The respondent authority stated that a notice and a personal hearing notice were issued through the portal, but the petitioner did not respond. The petitioner contended that no personal hearing notice was issued after the show cause notice, violating principles of natural justice, and that Sun Steels is an existent firm with GST registration and has paid taxes on supplies made to the petitioner.

Key Issues

1. Whether the impugned order dated 01.08.2022, issued by the respondent, is liable to be quashed for violation of the principles of natural justice, specifically the lack of a proper opportunity for a personal hearing, as contemplated under Section 74 of the Tamil Nadu Goods and Services Tax Act, 2017? Petitioner's Arguments: The petitioner argued that despite the respondent's claim of issuing a personal hearing notice, no such notice was actually served after the show cause notice, either through the portal or by post. This failure to provide a reasonable opportunity to be heard rendered the order arbitrary and illegal. The petitioner also contended that the premise of the demand, that Sun Steels is a non-existent taxpayer, is factually incorrect, as Sun Steels is a registered entity under GST and has remitted taxes for the supplies made to the petitioner. Had a personal hearing been granted, this fact could have been presented and clarified. Respondent's Arguments: The respondent argued that notices were issued through the portal and a personal hearing notice was also sent via the portal, to which the petitioner failed to respond. The respondent did not refute the petitioner's contention that Sun Steels is an existent firm and has paid taxes.