M/S. Sri Muthumalai Amman Hardwares vs. The Assistant Commissioners (St)

Held

The Court allowed the Writ Petition. It held that the impugned order dated 06.06.2022, passed by the respondent, was set aside because it was issued in violation of the principles of natural justice, as the petitioner was not afforded a reasonable opportunity of being heard. The respondent had conceded this fact. The Court reasoned that a fair hearing is a fundamental right, and any order passed without adhering to this principle is illegal and arbitrary. The matter was remitted back to the respondent for fresh consideration. The petitioner was directed to appear before the respondent on 30.06.2023 with all relevant documents, and the respondent was directed to pass orders on merits and in accordance with law within four weeks thereafter. No order as to costs was made.

Facts

The petitioner, M/S.Sri Muthumalai Amman Hardwares, a registered dealer under GST, challenged an order dated 06.06.2022 issued by the Assistant Commissioner (ST), Tuticorin. The respondent had issued a notice (Form GST DRC 01A) on 31.03.2022, alleging that the petitioner wrongly availed input tax credit (ITC) of Rs.3,53,835/- (CGST Rs.1,76,917/- and SGST Rs.1,76,918/-) against invoices from M/s.Joy International. The respondent contended that the supplier had not supplied any goods and the petitioner had not paid any tax. The petitioner responded, stating they received goods physically and the supplier filed GSTR1, reflected in GSTR2A, and argued the demand was based on presumption. A show cause notice followed on 21.04.2022. The petitioner requested 30 days to reply, but the impugned order was passed confirming the demand without affording a hearing.

Key Issues

1. Whether the impugned order dated 06.06.2022, passed by the respondent, is liable to be quashed for violating the principles of natural justice, specifically the right to a fair hearing, as contemplated under Section 75(4) of the CGST Act, 2017 and Rule 142(1) of the CGST Rules, 2017? Petitioner's Contention: The petitioner argued that the impugned order was passed without providing a reasonable opportunity of being heard, despite their request for time to submit a reply. They contended that the respondent failed to let in any evidence to prove non-receipt of goods and proceeded on presumptions. They relied on the principles of natural justice. Respondent's Contention: The respondent, through the Government Advocate, fairly conceded that the impugned order was passed without hearing the petitioner and that the principles of natural justice were ignored.