Zakir Hussain vs. Union Of INDIA, Department Of Revenue. Ministry Of Finance, New Delhi And Others

Held

The Court held that while the time period for submitting a reply to a show cause notice under Section 73(1) of the SGST Act, 2017, is not statutorily prescribed, a proper officer may fix a reasonable period. However, if a reply is received after the stipulated date but before the final order under Section 73(9) is passed, it becomes incumbent upon the proper officer to consider that reply. The Court reasoned that in the interest of justice, equity, and fair play, a reasoned order must be passed after dealing with such a response. The failure to consider a reply submitted before the final order, even if late, violates principles of natural justice. Consequently, the impugned order was set aside, and the matter was remanded to the STO to pass a fresh order under Section 73(9) after considering the petitioner's reply and providing an opportunity for oral hearing. The Court clarified that the proper officer retains the discretion to pass an order immediately upon expiry of the stipulated period if no reply is received.

Facts

The petitioner, Zakir Hussain, a GST-registered contractor, challenged an order dated 26.02.2025 issued by the State Taxes Officer (STO), Circle Kishtwar. This order raised a demand of Rs. 15,44,922/- for the financial year 2020-2021. The petitioner argued that the order was passed in violation of natural justice because his reply to the show cause notice dated 25.11.2024 was not considered. The STO had issued the show cause notice under Section 73(1) of the SGST Act, 2017, demanding Rs. 15,06,304/- and allowing a reply by 30.12.2024. The petitioner submitted his reply on 20.01.2025, after the due date but before the final order. The STO disregarded the reply, deeming it late, and proceeded to pass the demand order under Section 73(9) of the SGST Act, 2017.

Key Issues

1. Whether the proper officer is legally obligated to consider a reply/representation submitted by an assessee in response to a show cause notice issued under Section 73(1) of the SGST Act, 2017, when such reply is submitted after the stipulated period but before the final order under Section 73(9) is passed? (Question of law) 2. Whether the non-consideration of such a reply/representation vitiates the order passed under Section 73(9) of the SGST Act, 2017, as being in violation of the principles of natural justice? (Question of mixed law and fact) Petitioner's Contention: The petitioner argued that the STO's failure to consider his reply, submitted before the final order, violated the principles of natural justice, rendering the demand order invalid. He relied on the general principles of natural justice and the discretionary nature of time limits for submitting replies. Revenue's Contention: The judgment does not explicitly record arguments made by the revenue or state respondents.