Allu Rami Reddy vs. Union Of INDIA

Facts

The Petitioner, Allu Rami Reddy, proprietor of M/s RR Transport, filed a writ petition challenging an adjudication order dated 01.11.2022 passed by the Commissioner of Central Tax, Ranga Reddy GST Commissionerate (Respondent No. 3). The impugned order confirmed a demand of Rs. 4,30,29,119/-, imposed a penalty of the like amount, a penalty of Rs. 10,000/- under Section 77 of the Finance Act, 1994, and a late fee of Rs. 60,000/- for non-filing of ST-3 Returns. The Petitioner contended that the order was passed in contravention of the master circular on Show Cause Notice, Adjudication and Recovery dated 10.03.2017, specifically Clause 14.3, which mandates providing a fair and reasonable opportunity for personal hearing. The Petitioner had sought an adjournment for filing a reply and attending the personal hearing, but no response was received from the department, and the impugned order was passed without further opportunity.

Held

The Court held that the impugned order dated 01.11.2022 was unsustainable and the writ petition deserved to be allowed. The Court found sufficient force in the submissions made by the learned counsel for the petitioner, particularly in light of Clause 14.3 of the master circular on Show Cause Notice, Adjudication and Recovery dated 10.03.2017. The Court noted that the Petitioner had made a request for adjournment on 06.06.2022, seeking time until the second week of July 2022. Undisputedly, the department did not issue any further notice to the Petitioner nor informed them whether the request was accepted or rejected. Instead, the department proceeded to pass the impugned order on 01.11.2022. This approach was found to be in clear violation of the clauses envisaged in the master circular. Consequently, the impugned order was set aside, and the matter was remitted back to the third respondent for further proceedings. The Petitioner was directed to appear on 29.08.2023 for personal hearing and to file their response if they wished. No further notice would be issued by the department for the Petitioner's appearance, and the third respondent would take an appropriate decision on merits after hearing the Petitioner.

Key Issues

1. Whether the adjudication order dated 01.11.2022 is illegal, arbitrary, and violative of Article 14, 19(1)(g), and 21 of the Constitution of India, by failing to provide a fair and reasonable opportunity for personal hearing as mandated by Clause 14.3 of the master circular dated 10.03.2017? Petitioner's Arguments: The Petitioner argued that the impugned order was passed in violation of Clause 14.3 of the master circular. This clause requires at least three opportunities for personal hearing with sufficient intervals and separate communications for each opportunity. The Petitioner had requested an adjournment on 06.06.2022, seeking time until the second week of July 2022 to file a proper response and attend the hearing. However, the department did not respond to this request, nor did it issue any further notice, and proceeded to pass the order on 01.11.2022, thereby denying a fair hearing. Revenue's Arguments: The Respondent department submitted that a Show Cause Notice was issued on 18.10.2021, which was duly served. The Petitioner failed to respond to it. A notice for personal hearing was issued on 26.05.2022. While the Petitioner made a correspondence on 06.06.2022 seeking time until the second week of July 2022, they neither submitted a response nor appeared for the personal hearing. Therefore, the department passed the impugned order, and there was no scope for interference.