Limra Traders (Legal Name - Laxmi Dubey) Through Its Proprietor, Namely Laxmi Dueby vs. The State Of Jharkhand, Through Commissioner Of State Tax Department

Held

The Court held that the adjudication orders passed in both writ petitions were in utter violation of the principles of natural justice and the mandatory provisions of Sections 75(4) and 75(5) of the JGST Act, 2017. The Court noted that in W.P.(T) No. 6027 of 2024, an ex-parte order was passed on 10.07.2024, despite the show cause notice fixing compliance for 04.07.2024, and the order-sheet indicated a compliance date of 05.07.2024. Similarly, in W.P.(T) No. 6028 of 2024, an ex-parte order was passed on 05.06.2024, after no proceedings were held on the scheduled compliance date of 03.05.2024. The Court reiterated its previous findings in M/s. Godavari Commodities Limited, emphasizing the necessity of granting a personal hearing and adhering to due procedure. The Court found that the State Tax authorities continued to pass adjudication orders in disregard of statutory provisions and natural justice, despite previous directions issued in 2022. The ratio decidendi is that adjudication orders passed without affording a proper opportunity of personal hearing, in violation of Sections 75(4) and 75(5) of the JGST Act, are unsustainable. The Court quashed the impugned adjudication orders and directed the Respondents to pay costs of Rs. 1,00,000/- for each petition. The Respondents were granted liberty to initiate fresh proceedings in accordance with law.

Facts

The petitioner, Limra Traders, is challenging adjudication orders passed by the 5th Respondent (Assistant Commissioner of State Tax) under Section 74 of the Jharkhand Goods and Services Tax Act, 2017. In W.P.(T) No. 6027 of 2024, the petitioner availed Input Tax Credit (ITC) of Rs. 33,24,614.90 for the period 2023-24, which was blocked under Rule 86A(1)(a)(i) as the supplier, M/s. A.S. Enterprises, was allegedly non-existent. A show cause notice was issued on 05.06.2024 with a compliance date of 04.07.2024, but an ex-parte adjudication order was passed on 10.07.2024. In W.P.(T) No. 6028 of 2024, the petitioner availed ITC of Rs. 7,35,097.20 for the same period, which was also blocked. A show cause notice was issued on 04.04.2024 with a compliance date of 03.05.2024, but no proceedings were held on that date, and an ex-parte adjudication order was passed on 05.06.2024.

Key Issues

1. Whether the adjudication orders passed by the 5th Respondent are liable to be quashed for violating the principles of natural justice, specifically by failing to grant an adequate opportunity of personal hearing as mandated by Section 75(4) and 75(5) of the JGST Act, 2017? The petitioner argued that the adjudication orders were passed in flagrant violation of natural justice. They contended that in W.P.(T) No. 6027 of 2024, an ex-parte order was passed on the first date of compliance (05.07.2024), despite the show cause notice fixing compliance for 04.07.2024. In W.P.(T) No. 6028 of 2024, proceedings were held on 05.06.2024, and an ex-parte order was passed on that date, even though the show cause notice had a compliance date of 03.05.2024 and no proceedings were held on that date. The petitioner relied on this Court's decision in M/s. Godavari Commodities Limited v. The State of Jharkhand & Ors. The State did not record any specific arguments against the petitioner's contentions regarding the violation of natural justice.