M/S Sanjay Paliya Contractor vs. The State Of Madhya Pradesh

Held

The Court held that the writ petition is not maintainable. Regarding the issue of personal hearing, the Court found no violation of Section 75(4) of the GST Act. It reasoned that the petitioner, having failed to submit a reply to the show-cause notice, could not expect a personal hearing. The opportunity for a personal hearing is granted upon request, and since no reply was filed, the proper officer could not assume the petitioner's interest in a personal hearing. The Court noted that the judgments relied upon by the petitioner were distinguishable as they involved cases where a reply was filed, but a personal hearing was denied. In this case, the petitioner did not even respond to the show-cause notice by filing a reply and claiming a personal hearing. The Court also observed that the petitioner did not dispute the Order-in-Original, which was a summary order issued under Section 73 in DRC-07. Therefore, the legal grounds raised should have been pursued through an appeal. Since the limitation period for appeal had expired and was not condonable, the writ petition was dismissed. The petitioner was advised to prefer an appeal with a condonation of delay application before the appellate authority.

Facts

The petitioner, M/s Sanjay Paliya Contractor, a proprietorship firm registered under GST, is aggrieved by an order-in-original dated 28.07.2022 passed by the Assistant Commissioner of State Tax, Itarsi Circle, for the year 2020-21. Following scrutiny of returns, the Assistant Commissioner issued GST ASMT-10 on 20.04.2022, pointing out discrepancies and proposing recovery of tax amounting to Rs. 5,75,712/- with interest and penalty. The petitioner submitted a summary of GSTR-R2 without detailed explanation. Subsequently, a show-cause notice under Section 73 of the GST Act was issued on 07.06.2022, alleging wrong availment/utilisation of input tax credit, with a reply due by 06.07.2022. The petitioner failed to submit a reply, leading to the Assistant Commissioner passing a final order confirming a demand and interest penalty totaling Rs. 5,57,469/-. Instead of filing an appeal, the petitioner approached the High Court via a writ petition.

Key Issues

1. Whether the impugned order dated 28.07.2022 is unsustainable due to a complete violation of the principle of natural justice, specifically the failure to provide an opportunity of personal hearing as mandated by Section 75(4) of the GST Act? The petitioner argued that Section 75(4) mandates a personal hearing, and its absence renders the order invalid. They relied on various High Court judgments where orders were quashed for similar procedural lapses. The petitioner also contended that there was a violation of Rule 142 of the CGST Rules, as the order dated 28.07.2022 could not be considered an Order-in-Original under Section 73, thus precluding an appeal. The respondent argued that the writ petition is not maintainable as the petitioner has an alternative remedy of appeal under Section 107 of the GST Act, which has become time-barred. They contended that no violation of Section 75(4) or Rule 142 occurred, as the petitioner was granted a hearing opportunity but failed to avail it by not submitting a reply.