Zahoor Ahmed Mir vs. Joint Commissioner, Office Of Principal Commissioner Central GST, Jammu And Others

Facts

The petitioner, Sh. Zahoor Ahmed Mir, Director of M/S H K Cement Industries Pvt. Ltd., challenged an order dated 20.08.2025 passed by the Joint Commissioner, Central GST, Jammu, confirming a penalty imposed on him under Section 122(1A) of the CGST/J&K GST Act, 2017. The petitioner contended that the First Appellate Authority (respondent No. 2) confirmed this penalty in breach of natural justice. The original order dated 30.10.2024 was a composite one, holding both the Company and the petitioner liable. The Company filed an appeal, which was dismissed by the First Appellate Authority. The petitioner had also filed a separate appeal challenging the penalty imposed on him, but this appeal was not decided. Instead, the First Appellate Authority, while deciding the Company's appeal, also confirmed the penalty against the petitioner without affording him an opportunity to be heard.

Held

The Court held that the order in appeal dated 20.08.2025, in so far as it determined and confirmed the liability of the petitioner to pay penalty under Section 122(1A) of the Act, was in violation of the principles of natural justice and therefore a nullity in the eye of law. The Court reasoned that the original order was composite, and while the Company and the petitioner had filed separate appeals, the First Appellate Authority took up the Company's appeal first. Without affording the petitioner an opportunity to be heard, and while his separate appeal was pending, the Authority confirmed the penalty against him. This was a serious error of law. The ratio decidendi is that a statutory appellate authority cannot confirm a demand against an individual without providing them an opportunity to be heard, especially when their separate appeal is pending. The Court quashed the impugned order to the extent it pertained to the petitioner and directed that the petitioner's pending appeal before the First Appellate Authority be considered on its merits, without being influenced by the observations made in the impugned order. The Court clarified that its decision would not prejudice the Company's appeal before the GST Tribunal.

Key Issues

1. Whether the First Appellate Authority, in its order dated 20.08.2025, acted in breach of the principles of natural justice by confirming the penalty imposed on the petitioner under Section 122(1A) of the CGST/J&K GST Act, 2017, without affording him an opportunity of being heard, when the petitioner had filed a separate appeal that was pending adjudication? (Mixed question of law and fact, concerning Section 107 and principles of natural justice). Petitioner's Arguments: - The impugned order was passed in violation of the principles of natural justice as the petitioner was not afforded an opportunity of being heard. - The petitioner had filed a separate appeal against the penalty imposed on him, which was pending, and the First Appellate Authority should not have confirmed the penalty while deciding the Company's appeal. - The petitioner, as a Director, might have defenses distinct from the Company, necessitating an independent hearing. Revenue's Arguments: - The judgment records no specific arguments presented by the revenue or state in response to the petitioner's contentions regarding the breach of natural justice.