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 opportunity for a personal hearing is granted upon request, and the petitioner, having failed to submit a reply to the show-cause notice, did not explicitly demand a personal hearing. Therefore, the authority could not assume the petitioner's interest in a personal hearing. The Court noted that if a reply had been filed and a hearing requested but denied, the writ petition might have been entertained. The Court also observed that the petitioner did not dispute the Order-in-Original, which was issued as a summary order under Section 73 in DRC-07. Since the petitioner failed to file a reply to the show-cause notice and did not pursue the statutory remedy of appeal within the limitation period, the writ petition was dismissed. The petitioner was advised to prefer an appeal before the appellate authority with an application for condonation of delay.

Facts

The petitioner, M/s Sanjay Paliya Contractor, 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. 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. The petitioner failed to submit a reply by the due date of 06.07.2022. Consequently, the Assistant Commissioner passed the impugned order confirming the demand and interest/penalty totaling Rs. 5,57,469/-. Instead of filing an appeal, the petitioner filed a writ petition, alleging violation of GST Act provisions.

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 denial of an opportunity for a personal hearing as provided under Section 75(4) of the GST Act? (Question of law) 2. Whether there was a violation of Rule 142 of the CGST Rules, which mandates uploading the summary order in FORM GST DRC-07, and if the order dated 28.07.2022 can be considered an Order-in-Original under Section 73 of the GST Act, thus precluding an appeal? Petitioner's arguments: The petitioner contended that no personal hearing was granted, violating Section 75(4) and principles of natural justice, rendering the order unsustainable. They also argued that Rule 142 was violated, and the order was not a proper Order-in-Original, meaning an appeal was not the appropriate remedy. Reliance was placed on various High Court judgments where orders were quashed for want of personal hearing. Revenue's arguments: The respondent argued that the writ petition is not maintainable as the petitioner has a statutory remedy of appeal under Section 107 of the GST Act. They asserted that the petitioner failed to avail the opportunity of hearing granted and cannot blame the authorities. The respondent also contended that there was no violation of Section 75(4) or Rule 142.