Ms Abuturrab Agencies vs. The Commissioner State Tax

Facts

The petitioner, M/s Abuturrab Agencies, challenged an order dated 21.08.2024 passed by the respondent no. 2, under Section 73(9) of the C.G.S.T Act/ UKGST Act. This order demanded tax of Rs. 7,97,278/-, interest of Rs. 7,49,442/-, and penalty of Rs. 79,728/-, totaling Rs. 16,26,448/-. The petitioner argued that a show cause notice issued on 09.05.2024, which granted time to reply by 09.06.2024, fixed the personal hearing for 27.05.2024. This date for personal hearing was prior to the deadline for submitting the reply. Furthermore, the petitioner contended that the show cause notice was not served physically but uploaded on the GST portal, and they were unaware of its contents.

Held

The Court held that the procedure adopted by the respondents, fixing the date of personal hearing prior to the date fixed for submission of the reply to the show cause notice, was illegal and in breach of the principles of natural justice. The Court relied on the petitioner's submission and the precedent set by a Coordinate Bench in M/s Modine Thermal Systems Private Limited v. State of Uttarakhand and others. The reasoning was that the scheme of the Act requires that an assessee be given adequate opportunity to respond to a show cause notice before a personal hearing is conducted. Since the hearing was scheduled before the reply was due, the opportunity to be heard was rendered ineffective. Consequently, the assessment order could not be sustained. The Court quashed the impugned order and remitted the matter back to the Assessing Officer. The Assessing Officer was directed to proceed from the stage of the show cause notice, grant the petitioner an opportunity to file its reply, and thereafter fix a fresh date for personal hearing.

Key Issues

1. Whether the procedure adopted by the respondents, fixing the date of personal hearing before the date fixed for submission of the reply to the show cause notice, is illegal and in breach of the principles of natural justice, turning on Section 75(4) and 75(5) of the C.G.S.T Act/ UKGST Act. Petitioner's arguments: The petitioner contended that fixing the personal hearing before the due date for submitting the reply is illegal and violates the principles of natural justice. They relied on a judgment from a Coordinate Bench in M/s Modine Thermal Systems Private Limited v. State of Uttarakhand and others, which held that the procedure adopted by the authority was contrary to the scheme of the Act. The petitioner also argued that the show cause notice was not served physically but uploaded on the GST portal, and they had no knowledge of it. Respondents' arguments: The learned counsel for the Revenue did not dispute that the date of personal hearing was fixed prior to the date of submission of the reply, admitting that the personal hearing afforded was not effective and resulted in a breach of natural justice.