Ms Om Sai Ram Enterprises Through Its Proprietor Punit Kumar vs. The State Of Jharkhand Through The Secretary Cum Commissioner Department Of State Tax

Held

The Court held that the adjudication order dated 06.07.2020 and consequential demand notices were passed in violation of the statutory provisions of the JGST Act and the settled principles of natural justice, specifically the requirement of a reasonable opportunity of hearing. The Court referred to Section 75(4) and 75(5) of the CGST/JGST Act, which mandate granting an opportunity of hearing when an adverse decision is contemplated or upon request. The Court noted that the petitioner was issued an intimation of liability under Section 74(5) on 25.02.2020, followed by a show cause notice on 04.06.2020 with a reply date of 03.07.2020, but no date for personal hearing was fixed before passing the adjudication order on 06.07.2020. The Court found this to be a lacuna by the respondents. Therefore, the adjudication order was quashed and set aside, and the matter was remitted back to the concerned respondent to issue a fresh notice for personal hearing, provide relied-upon documents, and pass a fresh order after following the principles of natural justice. The ratio decidendi is that a personal hearing is a mandatory procedural requirement under Section 75(4) and 75(5) of the JGST Act before passing an adjudication order, and its denial vitiates the order.

Facts

The petitioner, M/s. Om Sai Ram Enterprises, filed a writ application challenging show cause notices and adjudication orders issued by the State Tax Officer, Bokaro Circle. These notices, dated 04.06.2020, pertained to the financial years 2017-18 and 2018-19, and alleged excess Input Tax Credit (ITC) claims based on an inspection under Section 67 of the Jharkhand Goods and Service Tax Act, 2017. The petitioner contended that the notices pre-judged the issue and fastened liability without granting an opportunity for hearing or providing relied-upon documents. The adjudication order under Section 74(9) and consequential demand notices were issued on 06.07.2020. The respondents argued that the writ petition was not maintainable due to the availability of an appeal under Section 107 of the JGST Act, but conceded that no personal hearing was granted.

Key Issues

1. Whether the show cause notices and adjudication orders issued by Respondent No. 4, which allegedly pre-judged the entire issue and fastened liability upon the petitioner without granting an opportunity of hearing, are liable to be quashed and set aside under Section 74 of the Jharkhand Goods and Service Tax Act, 2017 (JGST Act)? Petitioner's Arguments: The petitioner argued that the impugned notices and orders were passed in violation of the principles of natural justice, specifically by denying an opportunity for personal hearing and failing to provide relied-upon documents. This prejudiced their case. They relied on the High Court's decision in M/s. Godavari Commodities Ltd. Vs. The State of Jharkhand & Ors. and NKAS Service Pvt. Ltd. (2021-VIL-732-Jhar). Respondents' Arguments: The respondents raised a preliminary objection regarding the maintainability of the writ petition, citing the alternative remedy of appeal under Section 107 of the JGST Act. They also contended that while some documents were produced, the petitioner failed to submit detailed book accounts. However, they could not dispute the fact that no personal hearing was granted.