M/S Vishupriya Constructions vs. The Union Of INDIA

Facts

The petitioner, M/s Vishupriya Constructions, filed a writ petition before the Telangana High Court challenging a best judgment assessment order dated March 3, 2022, passed by the Commissioner of Central Tax, Ranga Reddy District (Respondent No. 2). The petitioner contended that they were not granted adequate opportunity of hearing, including a personal hearing, and that the proceedings were conducted in a mechanical manner, violating their own circular. Furthermore, the petitioner argued that Respondent No. 3, located in Maharashtra, had already initiated similar proceedings, accepted the petitioner's defense, and closed the matter, making further prosecution by Respondent No. 2 in Telangana impermissible. The Court had previously directed the Department to provide instructions regarding the opportunity of hearing granted.

Held

The Court held that the petitioner was denied a fair and reasonable opportunity of hearing. The Court noted that the Department's own master circular (Circular No. 1053/02/2017-CX) mandates providing at least three opportunities for personal hearing. The Department conceded that only one notice for personal hearing was issued to the petitioner. Therefore, the impugned proceedings were found to be unsustainable. The Court quashed and set aside the impugned order dated March 3, 2022. The petitioner was directed to appear before Respondent No. 2 on or before September 20, 2023, without further notice being issued. The petitioner was permitted to make a fresh representation, including jurisdictional aspects, and the respondent authorities were directed to take a fresh decision strictly on merits and in accordance with law. The issue regarding the prior adjudication by Respondent No. 3 was not expressly decided, as the matter was disposed of on the ground of denial of natural justice.

Key Issues

1. Whether the petitioner was denied a fair and reasonable opportunity of hearing before the impugned best judgment assessment order was passed, in violation of principles of natural justice and the Department's own circular (Circular No. 1053/02/2017-CX)? Petitioner's Arguments: The petitioner argued that they were not granted ample opportunity of hearing, including a personal hearing, and that the proceedings were conducted mechanically. They relied on Circular No. 1053/02/2017-CX, which mandates at least three opportunities for personal hearing. Additionally, the petitioner contended that since Respondent No. 3 in Maharashtra had already adjudicated a similar matter and closed the proceedings, Respondent No. 2 in Telangana could not initiate fresh proceedings under the same provision. Revenue's Arguments: The Department, represented by counsel, submitted that a show cause notice was duly served, but the petitioner did not respond. A notice for personal hearing was also issued, but again, there was no response. Consequently, the Department proceeded ex-parte, presuming the petitioner did not intend to contest the proceedings. The Department conceded that only one notice for personal hearing was issued.