M/S Sumit Enterprises Office At Badel Nawabganj Barabanki Thru. Proprietor Atul Kumar vs. State Of U.P. Thru. Prin. Secy. Ministry Of Finance Lko. And 2 Others

Held

The Court held that the order dated 15.03.2022, passed under Section 74 of the GST Act, was contrary to the mandate of Section 75(4) of the GST Act and violative of the principles of natural justice. Section 75(4) mandates that an opportunity of hearing must be granted where an adverse decision is contemplated. The Court noted that the show-cause notice and subsequent reminder notices indicated 'NA' for the date, time, and venue of the personal hearing, and the respondent conceded that no hearing was granted. This procedural lapse rendered the original order invalid. Consequently, the order-in-appeal dated 29.03.2023, which dismissed the petitioner's appeal on limitation, was also quashed as it was consequential to the original flawed order. The matter was remanded to respondent no. 3 to pass fresh orders after granting the petitioner an opportunity of hearing and allowing them to file a reply to the show-cause notice, in accordance with the law.

Facts

The petitioner, M/s Sumit Enterprises, challenged two orders. The first, dated 15.03.2022, was passed by respondent no. 3 under Section 74 of the GST Act, creating a demand of Rs. 1,48,160/-. This order was based on a survey conducted on 27.04.2019. The petitioner had filed a corrected return in July 2019 after mistakenly availing Input Tax Credit (ITC) which was not utilized. A show-cause notice was issued on 25.06.2021. The petitioner sought an adjournment due to their advocate's illness and requested a personal hearing. Despite this, the order dated 15.03.2022 was passed without providing an opportunity of hearing. The petitioner's subsequent appeal against this order, filed under Section 107 of the GST Act, was dismissed on 29.03.2023 as being beyond limitation.

Key Issues

1. Whether the order dated 15.03.2022, passed under Section 74 of the GST Act, is liable to be quashed for non-compliance with the mandatory requirement of providing an opportunity of hearing as stipulated in Section 75(4) of the GST Act and principles of natural justice? Petitioner's Contention: The petitioner argued that the original order dated 15.03.2022, confirming the demand under Section 74, was passed without providing an opportunity of hearing, despite a specific request for adjournment and personal hearing. They emphasized that the show-cause notice itself did not clearly indicate the date, time, and venue for the personal hearing, marking them as 'NA'. This violated Section 75(4) of the GST Act and the principles of natural justice. They also highlighted that the appeal was dismissed solely on limitation grounds, without addressing the merits of the original order's procedural infirmity. Respondent's Contention: The learned Standing Counsel, based on instructions, conceded that no personal hearing was granted, which was also evident from the impugned order. They did not present any arguments against the petitioner's claim regarding the lack of a hearing.