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

Held

The Court held that the impugned order dated 06.06.2022, passed by the respondent, was in violation of the principles of natural justice. The Court noted the respondent's concession that the order was passed without hearing the petitioner. Consequently, the Court set aside the impugned order and remitted the matter back to the respondent for fresh consideration. The petitioner was directed to appear before the respondent on 30.06.2023 with all relevant documents. The respondent was directed to pass orders on merits and in accordance with law within four weeks from the date of the petitioner's appearance. The Court explicitly stated that the petitioner shall be afforded a reasonable opportunity of being heard. No order as to costs was made. The ratio decidendi is that an order passed without affording a reasonable opportunity of being heard to the affected party is unsustainable in law and liable to be set aside on grounds of violation of natural justice.

Facts

The petitioner, M/s.Sri Muthumalai Amman Hardwares, a registered dealer under the GST Act, challenged an order dated 06.06.2022 issued by the Assistant Commissioner (ST), Tuticorin. The respondent had issued a notice in Form GST DRC 01A on 31.03.2022, alleging that the petitioner wrongly availed input tax credit (ITC) of Rs. 1,97,223.04/- (CGST and SGST) against invoices from M/s. Joy International. The respondent's contention was that the supplier had not supplied any goods and the petitioner had not paid any tax. The petitioner responded, asserting physical receipt of goods and that the supplier had filed GSTR1, reflected in GSTR2A, and argued the demand was based on presumptions. A subsequent show cause notice was issued on 21.04.2022. The petitioner requested 30 days to reply, but the impugned order was passed without affording this opportunity.

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 reasonable opportunity of being heard, as contemplated under the relevant provisions of the GST Act and Rules? Petitioner's arguments: The petitioner contended that the impugned order was passed without affording them a reasonable opportunity to present their case, despite a specific request for an extension of time to file their reply to the show cause notice. They argued that the respondent had not provided any evidence to disprove the physical receipt of goods and that the demand was based on presumptions. The petitioner sought to quash the order and direct the respondent to pass a fresh order after a proper hearing. Respondent's arguments: The learned Government Advocate for the respondent fairly conceded that the impugned order was passed without hearing the petitioner and that the principles of natural justice were ignored.