M/S Ijm Concrete Products PVT. LTD. Through Its Authorised Signatory Aduri Naga Ganga Raju vs. The State Of Madhya Pradesh

Held

The Court held that Section 75(4) of the CGST/MPGST Act, 2017, mandates that an opportunity of hearing be granted in two situations: (a) where a written request is received from the person chargeable with tax or penalty, or (b) where any adverse decision is contemplated against such person. The word 'or' is crucial, indicating that a hearing is required even if no specific request is made, provided an adverse decision is contemplated. The Court found that in the present case, an adverse decision was contemplated against the petitioners, and therefore, providing an opportunity for personal hearing was obligatory and mandatory. The Court also found substance in the argument that 'opportunity of hearing' includes 'personal hearing', as statutory forms visualize different stages including the date, venue, and time for personal hearing. Consequently, the impugned proceedings after the stage of reply to the show cause notices were set aside. The Court directed the respondents to provide an opportunity of hearing to the petitioners by an officer other than the one who issued the show cause notice, as per the precedent in Ultratech Cement Ltd. The Court explicitly stated that it had not expressed any opinion on the merits of the case.

Facts

The petitioner, M/s IJM Concrete Products Pvt. Ltd., filed two writ petitions challenging summary orders in Form GST DRC-07, arising from assessment orders passed under Section 73(1) of the Madhya Pradesh Goods & Service Tax Act, 2017. The impugned orders, issued by the Assistant Commercial Tax Officer, Dewas, for the period 01/04/2020 to 31/03/2021, raised a demand of Rs. 20,94,812/- for excess Input Tax Credit (ITC), including interest and penalty. The petitioner contended that these orders were passed ex-parte without providing an opportunity for personal hearing, violating principles of natural justice and Section 75(4) of the Act. Furthermore, the petitioner argued that Rule 142(1A) of the CGST Rules, 2017, requiring the issuance of Form DRC-01A prior to a show cause notice under Section 73(1), was not adhered to.

Key Issues

1. Whether the impugned assessment orders, passed without providing an opportunity for personal hearing, are in violation of Section 75(4) of the CGST/MPGST Act, 2017, and the principles of natural justice, especially when an adverse decision was contemplated against the petitioner? - Petitioner's argument: Section 75(4) mandates a hearing opportunity when an adverse decision is contemplated, irrespective of whether a specific request for personal hearing was made. The use of 'or' in the provision is significant. Reliance was placed on Ultratech Cement v. State of Madhya Pradesh, Graziano Trasmissioni India Pvt. Ltd. v. State of Gujarat, and M/s. BL Pahariya Medical Store v. State of U.P. - Revenue's argument: Section 75(4) refers to an 'opportunity of hearing' and not necessarily 'personal hearing'. The petitioner did not opt for a personal hearing after receiving the show cause notice (DRC-01). Reliance was placed on Union of India and Another vs. Jesus Sales Corporation. 2. Whether the non-adherence to Rule 142(1A) of the CGST Rules, 2017, by failing to issue Form DRC-01A before the show cause notice, renders the proceedings invalid? - Petitioner's argument: Violation of Rule 142(1A) invalidates the entire proceedings. Reliance was placed on Ravi Enterprises v. Commissioner of State Tax and Tanishka International v. State of U.P.