M/S Regency Hospital Limited vs. Union Of INDIA And 3 Others

Facts

Regency Hospital Limited (the petitioner) filed a writ petition challenging an order dated January 15, 2025, passed by the Additional Commissioner, CGST, Kanpur, under Section 74 of the CGST Act, 2017. This order created a GST demand for the period July 2017 - March 2018 to April 2021 - March 2022. The petitioner contended that show cause notices were issued for non-payment of GST on medicines sold to inpatients and packaged treatments. The petitioner filed a reply on August 30, 2024, but claims it was denied a personal hearing as reminders were sent to an old, changed email address. The impugned order stated that no response was filed and the petitioner failed to appear for multiple personal hearing opportunities. The petitioner argued this was factually incorrect and the order was passed without considering their reply and without affording a proper hearing.

Held

The Court held that the impugned order dated January 15, 2025, was unsustainable. It found that the authority's assertion in the order that no response to the show cause notice was filed was factually incorrect, as the petitioner had submitted a reply on August 30, 2024, evidenced by an acknowledgement. The Court also noted that the notices for personal hearing were sent to an abandoned email address, despite the petitioner having intimated a change of address to the respondents. Therefore, the petitioner could not be faulted for not appearing for hearings that they were not properly notified of. The Court concluded that the order was passed without considering the petitioner's response and without affording a proper opportunity of personal hearing, thus demonstrating a non-application of mind to the case record. The ratio decidendi is that an order passed without considering a filed reply and without proper notice for personal hearing violates principles of natural justice and is liable to be set aside. The Court quashed the impugned order and the demand raised, remanding the matter back to the respondent authority to provide the petitioner with an opportunity for a personal hearing and pass a fresh order in accordance with law.

Key Issues

1. Whether the impugned order dated January 15, 2025, passed under Section 74 of the CGST Act, 2017, is liable to be quashed and set aside for non-consideration of the petitioner's reply to the show cause notice and for denial of a proper opportunity of personal hearing? Petitioner's Arguments: The petitioner argued that they had indeed filed a reply to the show cause notice on August 30, 2024, as evidenced by an acknowledgement. They further contended that the notices for personal hearing were sent to an email address that had been changed and intimated to the respondents, rendering them unaware of the scheduled hearings. Consequently, the statement in the impugned order that no response was filed and no one appeared for personal hearings was factually incorrect. The petitioner asserted that the order was passed without applying its mind to the record and without affording a reasonable opportunity to be heard, thus violating principles of natural justice. Respondent's Arguments: The respondents argued that notices for personal hearing were repeatedly issued and uploaded to the given email address, and despite this, the petitioner chose not to appear. They did not dispute that a response to the show cause notice was filed by the petitioner.