M/S The Hi-Tech Gears LTD. vs. Deputy Commissioner, SGST

Held

The Court held that the order against the petitioner was passed without a reply to the show cause notice, and there was a dispute regarding the service of notice via email, with the petitioner claiming the email ID belonged to a former employee. The Court found that substantial grounds were raised in the petitioner's appeal, which ought to have been considered properly. Citing the Supreme Court's decision in Union of India & Another Versus Filco Trade Centre Pvt. Ltd. & Another, which directed the GSTN to open a common portal for filing TRAN-1 and TRAN-2 for two months (expiring 30.11.2022), the Court set aside the impugned orders dated 12.12.2019 and 04.03.2021. The respondents were directed to provide the petitioner with the facility to file form TRAN-1 within the extended period and not refuse to accept it. Upon submission, the department was to apply its mind, examine all aspects after affording an opportunity of hearing, and pass a fresh order in accordance with law. No issue was expressly left undecided.

Facts

The petitioner, M/s The Hi-Tech Gears Ltd., challenged orders dated 12.12.2019 and 04.03.2021, which partly rejected their claim for transitional Input Tax Credit (ITC). The petitioner contended that the Adjudicating Authority passed the order without a reply to the show cause notice and without proper opportunity of hearing. The denial of transitional ITC pertained to Education Cess, Secondary and Higher Education Cess, and purchases of goods/services. The petitioner cited the Supreme Court's decision in Union of India & Another Versus Filco Trade Centre Pvt. Ltd. & Another, allowing re-submission of TRAN-1 applications. The respondents argued that the show cause notice was sent to the petitioner's submitted email address and that the petitioner's claim was examined and partly rejected after due consideration, with the appeal also being rejected with reasons.

Key Issues

1. Whether the order passed by the Adjudicating Authority, partly rejecting the petitioner's transitional ITC claim, is vitiated due to the absence of a proper opportunity of hearing and without considering a reply to the show cause notice, contrary to principles of natural justice? 2. Whether the respondents are bound by the directions issued by the Supreme Court in Union of India & Another Versus Filco Trade Centre Pvt. Ltd. & Another, allowing for the re-submission or revised submission of TRAN-1 applications, to grant the petitioner an opportunity to file or re-file their TRAN-1 application? Petitioner's Arguments: The petitioner argued that the orders were passed mechanically without considering their substantial grounds. They emphasized the Supreme Court's ruling in Filco Trade Centre Pvt. Ltd., which permitted re-submission of TRAN-1 applications. The petitioner also raised a dispute regarding the service of the show cause notice, stating the email ID used was of an employee no longer in service. Respondents' Arguments: The respondents contended that the show cause notice was sent to the email address provided by the petitioner. They asserted that the petitioner's claim for transitional ITC was examined, partly rejected, and that the appeal was also considered and rejected with reasons, thus alleging no illegality.