M/S Daman Textiles vs. Union Of INDIA And Ors

Held

The Court allowed the writ petition. The primary reason for allowing the petition was the concession made by the learned State counsel that no opportunity of hearing was provided to the petitioner before passing the impugned order dated 25.01.2023. The Court found this to be a violation of the principles of natural justice. Consequently, the impugned order was set aside. The Court granted liberty to the respondent-department to pass a fresh order, but only after affording a proper opportunity of hearing to the petitioner and after serving the show cause notice dated 23.11.2022. The issue regarding the validity of issuing two show cause notices for the same cause of action was implicitly addressed by setting aside the impugned order and allowing a fresh adjudication process, but the Court did not explicitly rule on the legality of the dual SCNs in isolation. The ratio decidendi is that an order passed without affording a personal hearing, when required, is unsustainable in law.

Facts

The petitioner, M/s Daman Textiles, filed a writ petition challenging a show cause notice (SCN) dated 23.11.2022 (Form GST DRC-01) and an impugned order dated 25.01.2023. The impugned order imposed a tax liability of Rs. 24,60,526/-, interest of Rs. 19,55,560/-, and penalty of Rs. 12,30,264/- on the petitioner for allegedly claiming inadmissible Input Tax Credit (ITC) from bogus firms. The petitioner's primary grievance was that a prior SCN dated 09.03.2018 had already been issued for the same transaction and period. Furthermore, the petitioner contended that the impugned order was passed without providing an opportunity for a personal hearing.

Key Issues

1. Whether the issuance of a fresh show cause notice dated 23.11.2022 for the same cause of action and period, when a prior show cause notice dated 09.03.2018 was already issued, is legally sustainable under the CGST/SGST Act, 2017? 2. Whether the impugned order dated 25.01.2023, confirming the tax liability, interest, and penalty, is vitiated by the denial of an opportunity for a personal hearing to the petitioner, as mandated by principles of natural justice and relevant provisions of the CGST/SGST Act, 2017? Petitioner's arguments: The petitioner argued that issuing two show cause notices for the same cause of action and period is impermissible and liable to be set aside. They also contended that the impugned order was passed in violation of the principles of natural justice, as no opportunity for a personal hearing was granted before its issuance. Revenue's arguments: The learned State counsel, on instructions, conceded that no opportunity of hearing was given to the petitioner.