Mr.Ramesh Panthakani vs. The Commissioner Of Central Tax

WP/30855/2022HC TelanganaGSTCNR HBHC01044390202229 July 2022Bench: SUREPALLI NANDA,UJJAL BHUYAN7 pages

For Petitioner: SRI KARAN TALWARFor Respondent: Ms. SAPNA REyDDy

AI SummaryRemanded

Facts

The petitioner, M/s. Navadeep Transport, challenges an ex-parte Order-in-Original No. 33/2021-22-Adjn(Commr)-ST dated March 2, 2022, passed by the Commissioner of Central Tax, Respondent No. 1. The order confirmed a demand of Rs. 2,13,34,632/- under Section 73(2) of the Finance Act, 1994, and imposed a penalty of an equivalent amount under Section 78. The petitioner received the impugned order on April 4, 2022. The petitioner's primary contention is that they did not receive any notice for a personal hearing, preventing them from effectively defending their case. The respondents, however, stated that the notice was sent to the address mentioned in the petitioner's GST registration. The Court noted that the intimation of personal hearing sent to the petitioner was returned undelivered by postal authorities.

Held

The Court held that it would be in the interest of justice to remand the matter and afford the petitioner an opportunity of hearing before the confirmation of the demand and imposition of penalty. The Court set aside the impugned order-in-original dated March 2, 2022. The Court directed that the set-aside order be treated as a show-cause notice to the petitioner. The petitioner was granted three weeks from the date of the order to submit a reply. If the reply is filed within the stipulated period, Respondent No. 1 is to pass a fresh order in accordance with law after granting due opportunity of hearing, including personal hearing, to the petitioner. However, if no reply is filed, Respondent No. 1 would be at liberty to pass such order as deemed fit and proper. The ratio decidendi is that a demand and penalty order passed without affording a proper opportunity of hearing, especially when the notice for hearing was returned undelivered, violates principles of natural justice and warrants a remand.

Key Issues

1. Whether the ex-parte Order-in-Original No. 33/2021-22-Adjn(Commr)-ST dated March 2, 2022, passed by the Commissioner of Central Tax, is illegal and in contravention of the principles of natural justice, particularly concerning the non-receipt of a personal hearing notice by the petitioner? (Question of law and mixed fact and law, turning on principles of natural justice and potentially Section 73 of the Finance Act, 1994). Petitioner's Argument: The petitioner argued that they did not receive any notice for personal hearing, which prejudiced their ability to defend their case. This lack of opportunity violates the principles of natural justice. Respondents' Argument: The respondents contended that a notice of hearing was sent to the petitioner's registered address as per their GST registration details. They relied on the fact that the postal authorities returned the notice undelivered.

Sections Cited

Section 73, Section 78, Section 77, Section 70(1) of the Finance Act, 1994

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances

HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) FRIDAY, THE TWENTY NINTH DAY OF JULY TWO THOUSAND AND TWENTY TWO PRESENT THE HON'BLE THE CHIEF JUSTICE UJJAL BHUYAN AND THE HON'BLE MRS JUSTICE SUREPALLI NANDA WRIT PETITION NO: 30855 OF 2022 Between: AND 1. 2 a Ml.Rqmesh Panthakani, Proprietor, M/s.Navadeep Transport, A-11I/9 and A- lll80 BK Enclave, Miyapur, Hyderabad-49. ...pETtloNER The Commissioner of Central Tax, Ranga Reddy GST Commissionerate Posnett Bhavan, Tilak Nagar, Ram Kote, Hyderabad-500001 The Chief Commissioner of Central Tax, Hyderabad Customs and GST Zone, GST Bhavan, Basheerbagh Hyderabad - 500004 Union of lndia, Ministry of Finance. Department of Revenue, Represented by Secretary, North Bloc(, New Delhi-1 'l O0O1 ...RESpoNDENrs Petition under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue a Writ, Order or direction pa(icularly one in the nature of a WRIT OF MANDAMUS to declare as illegal the ex-parte Order-in-Original No.3312021-22- Adjn(Commr)-ST dated 2.3.2022 (received by the petitioner on 4.4.2022) (lmpugned order) passed by Respondent No.l , being ex facie in complete contravention of the principles of natural justice, erroneous, arbitrary, absurd, unjust, suffers from infirmity, untenable and unsustainable in law and violative of Article 14 and Article 19(1Xg) of the Constitution of lndia IA NO: 1 OF 2022 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased I I pleased to stay the impugned Order_in_Original No.33/202.1-22-Adjn (Commr)-ST dated 02 03 2022 and restrain the Respondents from recovery of service tax amount of Rs.2,13,34,632/_ and interest thereon, penalty of Rs.2,13,34,632/_ under Section 78, penalty of Rs.10,000/- under Section 77, p enalty of Rs. 1 ,00,000/- under Section 70(1) of the Finance Act, .1994 Counsel for the petitioner: SRI KARAN TALWAR Counsel for Respondent Nos. 1 & 2: Ms. SAPNA REyDDy Counsel for Respondent No. 3: SRI B. MUKHERJEE, COUNSEL FOR SRI N. RAJESHWAR RAO ASSISTANT SOLICITOR GENERAL

The Court made the following: ORDER

THE HON'BLE THE CHIEF JUSTICE UJJAL BHIIYAN AND THE HON'BLE MRS JUSTICE SUREPALLI NANDA WRIT PETITION No.3O855 of 2022 ORDER: Per thc Hon'bte thc Che[ Justice uiol Bhuganl Heard Mr. Karan Talwar, learned Counsel for the petitioner; Ms. Sapna Reddy, learned counsel for respondents No.1 and 2; and Mr. B.Mukherjee, learned counsel representing Mr. Namavarapu Rajeshwar Rao, learned Assistant Solicitor General of India appearing for respondent No.3. 2. Challenge made in this writ petition is to the order- in-original dated 02.03.2022 passed by respondent No.1 confirming demand of Rs.2,13,34,632.00 under Section 73(2) ot the Finance Act, 1994 arid imposing penalty of equivalent amount under Section 78 of the Finance Act, 1994. I I I

Learnecl Counsel for the petitioner submits that no notice of personal hearing was received by the petitioner' Therefore, petitioner could not effectively defend his case' 4- Learned Counsel for respondents No'1 and 2 hou'ever submits from the documents placed on record that nctice of hearing was sent to the address mentioned by the petitioner in its GST registration'

From a perusal of the order dated 02'03'2022' more particularly paragraph 5 thereof, u'e finci that intimation of personal hcaring sent to the service provider: i'e" the petitioner, was returned undelivered by the postal authorities. Following the same, respondent No' 1 passed the impugned order on the basis of available materials'

Upon hearing learned counsel for the parties and on due consideration, we are of the view that it would be in the interest of justice if the matter is remanded and petitioner is afforded an opportunity of hearing before confirmation of demand and imposition of penalty'

7 In view of the above, we pass the following order(s):- (i) Impugned order-in-original dated 02 'O3 '2022 rs herebY set aside. (ii) Though we have set aside the order-in-original dated 02.03'2022, tllLe same may be treated as the notice to show cause by the petitioner' (iii) Petitioner shall submit reply within a period ol three weeks from todaY' (iv) If the petitioner submits reply within the aforesaid period of three weeks' respondent No.1 shall pass necessary order in accordance with law after granting due opportunity of hearing including personal hearing to the Petitioner. (v) However, if no reply is filed by the petitioner' it would be open to respondent No' 1 to pass such order as may be deemed Iit and proper' B Writ petition is accordingly disposed of' \ l I i \ I

Miscellaneous applications pending, if aly, shall stand closed. However, there sha_ll be no order as to costs. P.PADMANABHA ASSISTANT REGI //// SECTION E I REDDY STRAR FFICER To,

The commissioner of centrar rax, Ranga Reddy GST commissionerate ^ lprry.tt B-havan, Titak Nagar, Ram Kotel, HvOeiaOaO_SOOoOi -- - -'-'' z. I ne untel uommtssioner of Central Tax, Hyderabad Customs and GST Zono ^ GST Bhavan, Basheerbagh Hyderabad'- S6OOO? 3. .r.he secretary, Union of rndia, Ministry of Finance. Department of Revenue, North Block, New Dethi-1 10001 {. One CC to Sri Karan Talwar Advocate tOpUCt 5 one cc to sri Namavarapu Rajeswara'Rao-, xssistant soricitor Generar (oPUC) 9 9ry 99 lo tM.r Sapna Reddy, Advocate (OPUC) /r. lWo L;lJ CoDies

One Soare boov MBC GJPY I

HIGH COURT DATED: 2910712022 1t{E sl Ta }' 1 o,J ).( 7]BA n 5 ORDER 1 U WP.No.30855 ot 2022 DISPOSING OF THE WRIT PETITION WITHOUT COSTS n^ 1olt ^-''/v I @

Reproduced from the public record of the Telangana High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.