M/S Jaiswal Construction vs. The State Of Madhya Pradesh

Held

The High Court dismissed the writ petition. The Court noted that the petitioner had not responded to the show-cause notice, and therefore, could not claim a lack of opportunity for hearing. The Court observed that if the petitioner had responded with a prayer for a hearing, the authority would have considered it. The Court also pointed out that the petitioner had alternative remedies available under Section 107 of the GST Act before the appellate authority and Section 121 before the GST Tribunal, which has now started functioning. The Court held that the writ petition was not maintainable on these grounds. However, the Court clarified that the dismissal of the writ petition would not preclude the petitioner from raising all grounds in their appeal. Any observations made were limited to the non-entertainment of the writ petition under Article 226 of the Constitution of India.

Facts

The petitioner, M/s Jaiswal Construction, filed a writ petition challenging a show-cause notice dated 27.12.2023 and an order dated 30.04.2024, both issued under Section 73 of the GST Act by the State Tax Officer. The proceedings relate to alleged excess Input Tax Credit (ITC) claimed for the financial years 2018-19 to 2021-22. The petitioner contended that a summons under Section 70 was not served, and the show-cause notice was not effectively communicated. The petitioner also argued that no personal hearing was granted before the ex parte order was passed. The respondent-State argued that the petitioner failed to respond to notices and had an alternative remedy under Section 107 of the GST Act. The State also pointed out that the GST Tribunal has started functioning, providing further appellate avenues.

Key Issues

1. Whether the proceedings conducted by the State Tax Officer violated the principles of natural justice by failing to provide an adequate opportunity of hearing to the petitioner, as contemplated under Section 75 of the GST Act? 2. Whether the petitioner was effectively served with the summons under Section 70 and the show-cause notice under Section 73 of the GST Act? Petitioner's arguments: The petitioner argued that the summons under Section 70 was never served, and the show-cause notice dated 27.12.2023 was neither served via email, post, nor effectively communicated through the GST portal. They further contended that the show-cause notice did not specify a date, time, or place for a personal hearing, leading to an ex parte order in violation of natural justice. The petitioner also disputed the computation of excess ITC, stating that reconciliation would reduce or eliminate the liability. Revenue's arguments: The State argued that the petitioner had an alternative remedy of appeal under Section 107 of the GST Act. They contended that the petitioner did not respond to the notice under Section 70, leading to a final order for recovery. Subsequently, the petitioner also failed to respond to the show-cause notice under Section 73. The State asserted that since the petitioner did not respond to the show-cause notice, they cannot claim a lack of hearing opportunity. The State also highlighted that the time for filing a regular appeal had expired, and the petitioner approached the High Court via writ petition.