Hindustan Contruction Company LTD. vs. The Union Of INDIA

Held

The Court held that the impugned orders could not be sustained as they suffered from the vice of non-application of mind to the detailed reply submitted by the petitioner. The Court found the orders to be "sketchy and non-speaking" on their face, which violated the mandatory requirement of Section 75(6) of the CGST Act. Section 75(6) mandates that the proper officer, in his order, shall set out the relevant facts and the basis of his decision. The Court reasoned that while the respondents contended that a personal hearing was offered and the petitioner failed to appear, the crucial fact remained that the detailed written submissions were not considered. Therefore, the principles of natural justice were violated. The Court quashed and set aside the impugned orders. The operative directions included the petitioner's representative appearing before the Joint Commissioner on December 22, 2022, for an opportunity of hearing, after which a fresh reasoned order would be passed. The show cause notice issued to the Joint Commissioner was discharged. No issue was expressly left undecided.

Facts

The petitioner, Hindustan Construction Company Ltd., challenged two orders dated June 24, 2022, passed by the Joint Commissioner, State GST, Circle Nimbaheda. Order No. 43 imposed interest and penalty, while Order No. 42 imposed interest, both due to delayed payment of tax. The petitioner argued that the orders were passed without adhering to natural justice principles and violating Section 75 of the CGST Act, as their detailed reply to the show cause notice and request for a personal hearing were not considered. The Joint Commissioner appeared in court with the dispatch register and contended that a notice for personal hearing was dispatched and delivered, and that the petitioner's representative was informed of the hearing date in the order-sheet. The petitioner's counsel later withdrew allegations of malafides against the officer but maintained that the orders were not speaking and deserved to be set aside.

Key Issues

1. Whether the impugned orders imposing interest and penalty are liable to be set aside on the ground of violation of principles of natural justice and non-adherence to the mandatory requirement of Section 75(6) of the CGST Act, specifically the failure to consider the petitioner's detailed reply and provide an adequate opportunity for oral submission? Petitioner's Arguments: The petitioner contended that the impugned orders were passed without providing an opportunity for a personal hearing and without considering the detailed reply submitted by the petitioner to the show cause notice. They argued that the orders were "sketchy and non-speaking," violating Section 75(6) of the CGST Act, which mandates that the proper officer's order must set out the relevant facts and the basis of the decision. The petitioner sought an opportunity to advance oral submissions and for a fresh reasoned order to be passed. Revenue's Arguments: The respondents, including the Joint Commissioner and the State GST Department, argued that the petitioner had deposited the tax amount with delay, making the demand for interest and penalty a direct legal consequence. They asserted that the officer acted in bonafide discharge of duties. The respondents claimed that the petitioner's representative was informed of the personal hearing date (June 22, 2022) on May 30, 2022, but failed to appear, leading to ex-parte orders. However, they could not dispute that the detailed written submissions were not adverted to in the impugned orders.