Ibm INDIA Private Limited vs. Union Of INDIA

Facts

The Petitioner, IBM India Private Limited, challenged an Adjudication Order dated February 24, 2025, passed by Respondent No. 3 for the period April 1, 2020, to March 31, 2021. The proceedings began with an audit initiated under Section 61 of the CGST Act, 2017, followed by a notice of discrepancies. An intimation of tax payable under Section 73(5)/74(5) read with Rule 142 in form DRC-01A was issued on November 14, 2024. The Petitioner was heard on December 27, 2024, and filed a reply to the Show Cause Notice. A request for personal hearing after January 7, 2025, was made. The Petitioner's Chartered Accountant attended a hearing on January 13, 2025, requesting an adjournment, with the next date fixed for January 21, 2025. The Petitioner contends no hearing occurred on January 21, 2025, and the Adjudicating Authority passed the order without further intimation.

Held

The Court held that the Adjudicating Authority failed to consider the Petitioner's contention regarding their SEZ status and the applicability of exemption notifications, which was raised in the reply to the Show Cause Notice. The Court found the impugned order to be cryptic and a non-speaking order, as it did not advert to the detailed contentions filed by the Petitioner, merely stating that 'the contentions are not acceptable and scope of service is very wide and it covers the subject transactions also'. The Court agreed with the Petitioner that a detailed reply was not adequately addressed. Consequently, the Court quashed and set aside the impugned order. The matter was remitted to the Adjudicating Authority for fresh consideration in accordance with law. The Petitioner was directed to appear on September 8, 2026, at 11:30 a.m., and was explicitly told not to seek any adjournment. The Adjudicating Authority was to pass a fresh order after hearing the Petitioner. All contentions of the parties were kept open. No issue was expressly left undecided.

Key Issues

1. Whether the Petitioner was afforded an adequate opportunity of personal hearing as required by law, turning on the interpretation of the procedural steps taken by the Adjudicating Authority and the Petitioner's right to be heard under the CGST Act, 2017. 2. Whether the Adjudicating Authority considered the contentions raised by the Petitioner in their reply to the Show Cause Notice, particularly regarding the Petitioner's status as being in a Special Economic Zone (SEZ) and the applicability of exemption notifications. Petitioner's Arguments: The Petitioner argued that no effective personal hearing took place on January 21, 2025, and the Adjudicating Authority passed the impugned order without proper intimation. They contended that their detailed reply to the Show Cause Notice, including arguments about SEZ benefits, was not considered, rendering the order cryptic and non-speaking. They relied on Tata Engineering & Locomotive Co. Ltd. vs. Collector of Central Excise, Pune. Revenue's Arguments: The Revenue contended that the Petitioner was given an adequate opportunity of hearing, citing the hearing on December 27, 2024, and submitted that the impugned order was passed after considering the Petitioner's submissions.