M/S Bajrang Lal Mahendra Kumar Through Partner Pawan Joshi vs. Union Of INDIA & Anr.

Facts

The petitioner, M/s Bajrang Lal Mahendra Kumar, filed a writ petition before the Delhi High Court challenging an order dated 27.12.2023 passed by the Adjudicating Authority under Section 73 of the Delhi Goods & Services Tax Act, 2017. This order was based on a show cause notice dated 25.09.2023, proposing a demand of ₹20,55,05,548/- on account of excess Input Tax Credit (ITC) for the financial year 2017-18. The petitioner claimed their GST registration was cancelled on 19.05.2022 due to business closure, and they were unaware of the show cause notice as it was not received through other electronic modes. They also contended that no personal hearing was scheduled, violating principles of natural justice. The petitioner asserted they maintained separate accounts for eligible and non-eligible businesses and had not availed excess ITC.

Held

The Delhi High Court held that the impugned order dated 27.12.2023, passed by the Adjudicating Authority under Section 73 of the DGST Act, was violative of the principles of natural justice. The Court found merit in the petitioner's submission that they were not afforded an adequate opportunity of hearing. The Court noted that the petitioner's GST registration had been cancelled, and they claimed non-receipt of the show cause notice through electronic modes. Crucially, the absence of a fixed date, time, and schedule for a personal hearing was considered a significant procedural lapse. Consequently, the Court set aside the impugned order. The matter was remanded to the Adjudicating Authority for fresh consideration. The petitioner was granted two weeks from the date of the order to file a response to the show cause notice along with supporting documents. The Adjudicating Authority was directed to consider the petitioner's response, provide an opportunity for a hearing, and then pass a reasoned order. The issue of whether the petitioner had availed excess ITC was not decided on merits by the High Court.

Key Issues

1. Whether the impugned order dated 27.12.2023, passed by the Adjudicating Authority under Section 73 of the DGST Act, is violative of the principles of natural justice due to non-service of the show cause notice and denial of an opportunity of hearing? (Mixed question of law and fact) 2. Whether the petitioner availed excess Input Tax Credit (ITC) in respect of non-business transactions and exempted supplies for the financial year 2017-18? (Question of fact) Petitioner's Arguments: The petitioner argued that the impugned order was passed in violation of principles of natural justice. They contended that they were unaware of the show cause notice as their business had closed, GST registration was cancelled, and the notice was not served through alternative electronic modes like WhatsApp or email. Furthermore, the petitioner pointed out that no date, time, or schedule for a personal hearing was fixed. They also asserted that they had not availed any excess ITC, as they maintained separate trading accounts for eligible and non-eligible businesses. Revenue's Arguments: The judgment does not record any specific arguments made by the respondents (Union of India & Anr.).