M/S Hitech Sweet Water Technologies PVT. LTD. vs. State Of Gujarat

Facts

The petitioner, M/s. Hitech Sweet Water Technologies Pvt. Ltd., a manufacturer of water filter machines, filed a writ petition challenging orders dated April 19, 2022, issued by the competent authority of the State of Gujarat. These orders pertained to financial years 2017-18, 2018-19, and 2019-20. The orders demanded payment of tax under Section 73(9), interest under Section 50, and a 10% penalty under Section 73(9) of the Gujarat Goods and Services Tax Act, 2017. The petitioner also challenged the preceding show-cause notices dated March 13, 2022. The amounts claimed in the show-cause notices were Rs. 5,46,79,672/-, Rs. 2,33,65,984/-, and Rs. 1,35,60,109/- for the respective years. The final determined amounts were Rs. 6,88,92,903/-, Rs. 2,36,64,166/-, and Rs. 1,09,47,450/-.

Held

The Court held that the impugned orders dated April 19, 2022, were passed without affording the petitioner an opportunity of personal hearing, which constitutes a violation of the principles of natural justice. While the petitioner's reply to the show-cause notice indicated a waiver of personal hearing, the Court accepted the petitioner's submission that this was an inadvertent mistake and that the petitioner should have been granted the right to a personal hearing to properly present their case. The Court relied on the principle laid down in M/s. Alkem Laboratories Ltd. Vs. Union of India. The respondent-State's counsel conceded to this position. Consequently, the Court set aside the three impugned orders. The competent authority was directed to provide a personal hearing to the petitioner within three weeks from the date of the order and thereafter pass fresh orders in accordance with the law within two weeks of such hearing. The Court explicitly stated that it had not expressed any opinion on the merits of the case.

Key Issues

1. Whether the impugned orders, demanding tax, interest, and penalty, were passed in gross violation of the principles of natural justice due to the absence of an opportunity of personal hearing for the petitioner, as contemplated under Section 75(4) of the Central Goods & Service Tax Act, 2017? The petitioner argued that the orders were liable to be quashed for violating principles of natural justice, specifically the lack of a personal hearing, relying on the judgment in M/s. Alkem Laboratories Ltd. Vs. Union of India. The petitioner conceded that their reply to the show-cause notice indicated they did not opt for personal hearing but contended this was a mistake and they should have been granted the right to a personal hearing to present their case properly. The respondent-State, through the learned AGP, could not dispute the proposition regarding the necessity of a personal hearing and, in totality of the facts, agreed to provide a personal hearing to the petitioner.