Ntc Industries LTD vs. State Tax Officer Karagpur And Ors
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The appellant, NTC Industries Ltd., filed a writ petition challenging an order dated 31.03.2022 passed under Section 129(3) of the Central Goods and Services Tax Act, 2017, and allied Acts. The learned Single Judge dismissed the writ petition, directing the appellant to avail of an alternative remedy. The appellant then filed an intra-court appeal. The appellant contended that they were issued a show cause notice dated 27.03.2022, with a seven-day period to reply. However, they received the notice only on 29.03.2022, and the impugned order was passed on 31.03.2022, before the stipulated reply date of 02.04.2022. The order dated 31.03.2022 referred to objections filed by the appellant, which the appellant denied filing in response to the show cause notice, stating it was a prior explanation regarding the movement of goods.
Held
The Court held that the principles of natural justice were violated. The appellant was granted seven days to reply to the show cause notice dated 27.03.2022. However, the appellant received the notice on 29.03.2022, and the impugned order was passed on 31.03.2022, which was before the stipulated reply deadline of 02.04.2022. The Court noted that the impugned order referred to objections filed by the appellant, which the appellant denied filing in response to the show cause notice. The Court found that the opportunity to show cause was not an effective one. Therefore, the order passed in the writ petition was set aside, and consequently, the order dated 31.03.2022 was also set aside. The Court directed the appellant to treat the order dated 31.03.2022 as a show cause notice and submit their objections/reply within ten days of receiving the server copy of the order. Upon receipt of the reply, the authority was directed to grant a personal hearing and pass a fresh order on merits. The bank guarantee was to remain alive until the fresh order was passed.
Key Issues
1. Whether the order dated 31.03.2022, passed under Section 129(3) of the CGST Act, 2017, and relevant allied Acts, was passed in violation of the principles of natural justice, specifically concerning the opportunity to file a reply to the show cause notice dated 27.03.2022? Petitioner's Arguments: The appellant argued that they were not granted an effective opportunity to reply to the show cause notice. They received the notice late, and the impugned order was passed before the expiry of the stipulated reply period. They also contended that the objections mentioned in the impugned order were not filed in response to the show cause notice but were prior explanations. The appellant emphasized that the opportunity to show cause must be meaningful and not a mere formality, especially since the revenue's interest was protected by a bank guarantee and bond. Revenue's Arguments: The judgment does not record any specific arguments made by the revenue or State regarding the violation of natural justice or the validity of the impugned order.
Sections Cited
Section 129(3)
AI-generated summary — verify with the full judgment below
Item no. 04 IN THE HIGH COURT AT CALCUTTA CIVIL APPELLATE JURI ICTION APPELLATE SIDE Present: The Hon’ble Justice T.S. Sivagnanam And The Hon’ble Justice Hiranmay Bhattacharyya MAT 557 of 2022 with IA No. CAN 1 of 2022
NTC Industries Ltd. vs. State Tax Officer, Karagpur Zone & ors. Appearance: For the Appellants : Mr. Anil Kumar Dugar Mr. Rajarshi Chatterjee Mr. Gobinda Dey Mr. Gobind Jethalia For the Respondents : Mr. A. Ray (State) Mr. T. M. Siddiqui Mr. Debasish Ghosh
Heard on : 07.06.2022 Judgment on : 07.06.2022 T.S. Sivagnanam J.: This intra court appeal by the appellant is directed against an order dated 07.04.2022 passed in WPA 6146 of 2022 filed by the appellant challenging the order dated 31.03.2022 passed under Section 129(3) of the Central Goods and Services Tax Act, 2017 read with relevant provisions of West Bengal Goods and Services Tax Act, 2022, Integrated Goods and Services Tax Act, 2017 and Goods and Services Compensation to States Tax Act, 2017. The learned Single Judge has dismissed the writ petition by directing the appellant availing alternative remedy. Aggrieved by the same, the appellant is before us.
We have heard the learned counsel for both the parties. We are not inclined to go into the merits of the matter but we are convinced that the arguments made by the learned counsel for the appellant that there has been violation of principles of natural justice. We say so because of the fact that the appellant has been granted seven days time to submit its reply to the show cause notice dated 27.03.2022. The appellant’s case is that they were not communicated with the same on 27.03.2022 but received the same only on 29.03.2022. Even going by the date of the show cause notice dated 27.03.2022, the appellant had time to submit its reply on or before 02.04.2022. However, the impugned order was passed on 31.03.2022 i.e. before the stipulated time limit. We find that in the order dated 31.03.2022 in paragraph 7, the Officer has referred to an objection filed by the appellant and certain reasons have been set out as to why the objections are not acceptable. Learned counsel appearing on behalf of the appellant submitted that no objections were filed to the show cause notice dated 2
2022 and what has been referred to was a letter which was given at the first instance when the appellant was called upon to explain the nature of transaction and movement of goods. In any event, when an opportunity is given to show cause it should be an effective opportunity and not an empty formality. The interest of the revenue has been sufficiently safeguarded as the goods have been released on furnishing of bank guarantee and bond. Therefore, we are of the considered view that adequate opportunity should be granted to the appellant and thereafter the authority should take a decision in the matter. In view of the above, the order passed in the writ petition is set aside. Consequently, the order dated 31.03.2022 is set aside. We direct the appellant to treat the order dated 31.03.2022 as a show cause notice and submit its objections/reply within ten days from the date of receipt of the server copy of this order. On receipt of the reply, the concerned authority shall afford an opportunity of personal hearing to the authorized representative of the appellant and pass a fresh order on merit and in accordance with law. Till orders are passed by the respondent authority in terms of the above direction, the bank guarantee shall be kept alive and shall abide by the order that may be passed pursuant to the above direction. 3
For the reasons given hereinabove, the appeal stands allowed. Consequently, the connected application also stands disposed of. (T. S. Sivagnanam, J.) (Hiranmay Bhattacharyya, J.) RP/Amitava (AR. CT.) 4
Reproduced from the public record of the Calcutta High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.