Agarwal Wheels PVT. LTD. A Company Incorporated Under The Companies Act 1956 vs. The State Of Madhya Pradesh

Held

The Court held that the show cause notice dated 22.07.2022, while indicating an intention to provide a personal hearing as required by law, failed to specify the date, time, and venue. The mention of 'NA' in the columns for these details was sufficient to infer that no personal hearing was granted. The Court found this to be a violation of the principles of natural justice. Regarding the respondents' argument about the alternative remedy of appeal, the Court held that when a due opportunity of hearing has not been afforded as required by law, the availability of an alternative remedy does not preclude the High Court from exercising its jurisdiction under Article 226. Following the precedent set by the Allahabad High Court in Bharat Mint & Allied Chemicals, the Court quashed the impugned order and remitted the matter back to the Deputy Commissioner for fresh adjudication after providing the petitioner with a personal hearing. The writ petition was allowed.

Facts

The petitioner, Agarwal Wheels Pvt. Ltd., challenged an order dated 24.08.2022 passed by the Deputy Commissioner, Audit Wing, Jabalpur under Section 74 of the MPSGST/CGST Act, 2017 and Section 20 of the IGST Act, 2017. This order upheld the tax, interest, and penalty detailed in a show cause notice dated 22.07.2022. The petitioner contended that despite the show cause notice mentioning a personal hearing, no date, time, or venue was provided. They argued that this omission violated Section 75(4) of the Act, which mandates a personal hearing before passing an adverse order. The respondents supported the impugned order but did not justify the lack of personal hearing, instead arguing for the availability of an alternative remedy of appeal.

Key Issues

1. Whether an opportunity of personal hearing is mandatory under Section 75(4) of the CGST/MPSGST Act, 2017, when an adverse decision is contemplated against a person? 2. Whether the impugned adjudication order dated 24.08.2022, passed without affording a personal hearing, is in breach of the principles of natural justice and therefore unsustainable? Petitioner's Arguments: The petitioner argued that the show cause notice, while mentioning a personal hearing, failed to specify the date, time, and venue. They contended that Section 75(4) of the Act mandates a personal hearing in such circumstances, and its absence renders the impugned order invalid. They relied on the Allahabad High Court's decision in Bharat Mint & Allied Chemicals Vs. Commissioner of Commercial Tax. Respondents' Arguments: The respondents supported the impugned order but failed to justify the lack of personal hearing. They argued that the petitioner had an alternative remedy of appeal, and therefore, the High Court should not interfere under Article 226 of the Constitution.