Mahindra And Mahindra Limited vs. Union Of INDIA

Held

The High Court held that the order dated 29.12.2023, passed by the Joint Commissioner of State Tax, was in violation of the principles of natural justice and the mandate of Section 75(4) and 75(5) of the CGST Act. The Court found that the appellant was not provided with a meaningful opportunity of hearing, despite seeking adjournments and reiterating their request for a hearing in their reply. The Court emphasized the importance of oral hearing in adjudication and cited Supreme Court judgments reinforcing the principles of natural justice. The Court disagreed with the learned Single Judge's decision to non-suit the appellant on the ground of alternate remedy, stating that when principles of natural justice are breached, the High Court can exercise its jurisdiction under Article 226. The Court set aside the order of the learned Single Judge and directed the appellant to appear before the Joint Commissioner of State Tax for a personal hearing on 08.05.2024.

Facts

Mahindra & Mahindra Limited (appellant) filed an appeal against an order dated 21.03.2024 by the learned Single Judge, which dismissed their writ petition on the grounds of an alternate remedy. The appellant had been served with a notice under Section 73(1) of the Central Goods and Services Tax Act, 2017, on 29.09.2023, for a contemplated tax liability. The appellant sought an extension for filing their reply, which was due by 30.10.2023, as the date for personal hearing was fixed before the reply date. Despite seeking adjournments and filing a reply on 15.11.2023, reiterating the request for a hearing, an order was passed on 29.12.2023 without granting a personal hearing. The appellant contended that this violated principles of natural justice.

Key Issues

1. Whether the order dated 29.12.2023, passed by the Joint Commissioner of State Tax, is bad in law for violating the principles of natural justice by failing to provide a meaningful opportunity of hearing to the appellant, as mandated by Section 75(4) and 75(5) of the CGST Act? Appellant's arguments: The appellant argued that the order was passed in violation of Section 75(4) and 75(5) of the CGST Act, which mandate granting an opportunity of hearing, especially when an adverse decision is contemplated. They contended that their requests for adjournment and a proper hearing were ignored, leading to a breach of natural justice. Reliance was placed on Supreme Court decisions in Kalpraj Dharamshi and another v. Kotak Investment Advisors Limited and High Court judgments in Fino Paytech Limited v. Union of India and MS KEC International Limited v. Union of India. Respondents' arguments: The respondents argued that Section 75(4) does not mandate a hearing at every stage. They contended that personal hearings were scheduled on 11.10.2023 and 25.10.2023, but the appellant's representative did not appear. They also submitted that the learned Single Judge correctly directed the parties to pursue the alternate remedy of appeal, implying a statutory deposit was mandatory.