Fis Payment Solutions And Services INDIA PVT LTD Thr Its Director vs. Union Of INDIA Thr Its Secretary And Ors

Held

The Court held that the impugned order dated April 30, 2024, could not be sustained and was liable to be quashed and set aside. The Court found that the Petitioner ought to have been given an opportunity to respond to and controvert the findings in the Verification Report, even if it was not the sole basis for the order. Failure to share this vital document was considered a gross violation of the principles of natural justice. The Court noted that if the Verification Report had been made available, the Petitioner might have been able to correlate invoices or provide further submissions. The Court also observed discrepancies in the dates of the Verification Reports mentioned in the impugned order relative to the show cause notice, emphasizing that any report available before the show cause notice should have been provided with it, or any report prepared thereafter should have been shared via a supplementary notice or query memo. The Court directed Respondent No. 3 to provide all relied-upon Verification Reports to the Petitioner by September 30, 2024, after which the Petitioner would have until October 30, 2024, to respond. Respondent No. 3 was then to pass a fresh order by December 31, 2024, after providing a personal hearing.

Facts

The Petitioner, FIS Payment Solutions and Services India Pvt. Ltd., challenged an order in original dated April 30, 2024, passed by Respondent No. 3. This order demanded recovery of inadmissible input tax credit amounting to Rs. 65,53,85,976/- under Section 73(9) of the CGST Act, along with interest and a penalty of Rs. 6,55,38,597/- under Section 122(2)(a) read with Section 73 of the CGST Act. The Petitioner argued that the impugned order relied on a Verification Report that was neither mentioned in the show cause notice nor provided to them, violating principles of natural justice. The Revenue contended that the Assistant Commissioner submitted a reconciliation report based on available records, and the findings were based on the adjudicating authority's own assessment.

Key Issues

1. Whether the impugned order dated April 30, 2024, passed by Respondent No. 3 is liable to be quashed and set aside on the ground that it relied upon a Verification Report which was not furnished to the Petitioner and not referred to in the show cause notice, thereby violating principles of natural justice? Petitioner's contention: The Petitioner argued that the non-furnishing of the Verification Report, which formed the basis of the impugned order, constituted a violation of the principles of natural justice and indicated a predetermined mindset of Respondent No. 3. They contended that this ground alone was sufficient to quash the order. Revenue's contention: The Revenue argued that the Assistant Commissioner had submitted a reconciliation report based on available records and documents, and therefore, providing a copy of this report was not necessary. They also stated that the findings were not solely based on the reconciliation report but also on the adjudicating authority's independent assessment of the law.