M/S Global Trading Company vs. State Of U.P. And 2 Others

Held

The Court held that the rules of natural justice demand that if an authority proposes to draw an adverse inference against a person based on gathered material and evidence, it is imperative that such adverse material is made available to that person before any final conclusion is drawn. The Court found no reason why the adverse material relied upon against the petitioner was not supplied along with the show cause notice dated September 23, 2021. The Court also noted that the petitioner had filed a specific application on November 10, 2021, requesting these documents. Accordingly, the Court directed Respondent No. 3 to make available copies of all documents and adverse material relied upon by it to the petitioner within two weeks of the petitioner filing an application within one week. The petitioner was then granted three weeks to file its reply, after which a date of hearing was to be fixed, and an appropriate order passed in accordance with law, complying with the rules of natural justice. The Court did not quash the show cause notice itself.

Facts

The petitioner, M/s Global Trading Company, challenged a show cause notice dated September 23, 2021, issued under Section 74 of the U.P. Goods and Services Tax Act, 2017, for the period 2018-19. The notice was issued by Respondent No. 3. The petitioner argued that the notice did not refer to the documents and material on which the tentative conclusions were based. Consequently, the petitioner filed an application on November 10, 2021, requesting copies of the relied-upon documents. However, the adverse material had not been supplied to the petitioner by the revenue.

Key Issues

1. Whether the show cause notice dated 23.09.2021 issued under Section 74 of the U.P. Goods and Services Tax Act, 2017, is liable to be quashed for non-disclosure of material relied upon by the authority? 2. Whether the principles of natural justice were violated by the non-supply of adverse material to the petitioner along with the show cause notice? Petitioner's Contentions: The petitioner contended that the show cause notice was issued without disclosing the documents and material on which the adverse inferences were drawn. They argued that the rules of natural justice mandate that any adverse material used against an assessee must be provided before any final conclusion is reached. The petitioner further highlighted that their subsequent application for these documents on November 10, 2021, had not yet been acted upon by the revenue. Revenue's Contentions: The judgment does not record any specific contentions made by the revenue in response to the petitioner's arguments regarding the non-disclosure of material.