M/S Mbr Flexibles LTD. vs. Deputy Commissioner Of State Tax (Enforcement) Division 1

Facts

M/s MBR Flexibles Ltd. (the petitioner) received a Notice under Section 129(3) of the CGST Act, 2017 and SGST Act, 2017, and Section 20 of the IGST Act, 2017, dated January 6, 2022, from the Deputy Commissioner of State Tax (Enforcement) Division 1 (the respondent). The notice called upon the petitioner to appear on January 13, 2022, and explain why penalty should not be levied. Concurrently, an order dated January 6, 2022, was issued, which was received by the petitioner on the same day the notice was issued. The petitioner contends that this order was passed without providing an opportunity of hearing, violating principles of natural justice. A notice was issued to the respondents by the High Court on March 30, 2022, but no affidavit-in-reply has been filed.

Held

The Court held that the impugned order dated January 6, 2022, passed by the respondent No. 2 was in breach of the principles of natural justice because an opportunity of hearing was not afforded to the petitioners. The Court noted that the notice and the impugned order were passed on the same date, January 6, 2022, which clearly indicated that the petitioner was not heard before the order was passed. The ratio decidendi is that any order passed in violation of the principles of natural justice, particularly the right to be heard, is unsustainable. Consequently, the petition was allowed, and the impugned order was quashed and set aside. The petitioner was directed to appear before the authority within three weeks of receiving the order, after which the authority was to pass a fresh order in accordance with the law and after examining any material placed by the petitioner. The rule was made absolute.

Key Issues

1. Whether the impugned order dated January 6, 2022, passed by the respondent No. 2 is liable to be quashed and set aside on the ground of violation of the principles of natural justice, specifically for not affording an opportunity of hearing to the petitioner, as contemplated under Section 129(3) of the CGST Act, 2017 and SGST Act, 2017, and Section 20 of the IGST Act, 2017? Petitioner's arguments: The petitioner argued that the respondent authority passed the order on the same day the notice was issued, without giving the petitioner an opportunity to be heard. This constitutes a breach of the principles of natural justice, rendering the order invalid. Revenue's arguments: The learned Assistant Government Pleader opposed the petition.