Vijay Chandrakant Trivedi vs. State Of Gujarat

Held

The Court held that the impugned order dated 06.07.2021 was a completely non-speaking order, which is a clear violation of the principles of natural justice. The Court noted that the learned AGP, representing the revenue, had agreed to the proposition of remanding the matter back. The Court found that the respondent authority had failed to consider the reply and substantiating material filed by the petitioner. Consequently, the Court quashed and set aside the impugned orders in all three petitions. The matters were remanded back to the respondent authority to proceed from the stage of considering the petitioner's reply and the material adduced in support thereof. The respondent authority was directed to decide the matter within six weeks from the date of receipt of the order, providing an opportunity for personal hearing or clarification if needed. The Court explicitly chose not to enter into the merits of the matter.

Facts

The petitioner, Vijay Chandrakant Trivedi, proprietor of M/s. Laxminarayan Impex, claimed Input Tax Credit (ITC) for the financial year 2018-19. Following a search under Section 67 of the CGST Act in August 2019, documents were seized. The petitioner received an intimation under Section 74(5) of the CGST Act, alleging wrongful ITC claims due to the cancellation of registration of the dealers from whom purchases were made. A show cause notice under Section 74 of the CGST Act was issued on March 4, 2021, proposing to recover tax, interest, and penalty for July 2017 to March 2018. The petitioner replied on June 28, 2021, highlighting that the cancellation of registration of some vendors had been quashed by this Court. Despite this, the respondent issued a non-speaking order dated July 6, 2021, under Section 74 of the CGST Act, which the petitioner challenges.

Key Issues

1. Whether the impugned order dated 06.07.2021, passed under Section 74 of the CGST Act, is a non-speaking order and thus violative of principles of natural justice, as contended by the petitioner? 2. Whether the respondent authority failed to consider the reply and substantiating material filed by the petitioner, including court orders quashing vendor registration cancellations, as argued by the petitioner? Petitioner's Arguments: The petitioner argued that the impugned order is a non-speaking order, failing to provide any reasons, and thus contrary to law and a clear violation of natural justice. They emphasized that their reply, along with supporting documents, was not considered by the authority. The petitioner also pointed out that this Court had previously quashed the cancellation of registration for some of the vendors in question. The petitioner relied on the principle that a non-speaking order is unsustainable. Revenue's Arguments: The learned AGP, under instructions from the Assistant Commissioner, agreed with the proposition of remanding the matter back by quashing and setting aside the impugned order. She fairly conceded that the impugned order lacked reasons and required reconsideration. The revenue acknowledged that a show cause notice had been issued and a reply filed.