Raymond Limited A Company Incorporated Under The Provisions Of The Companies Act 1956 And Having Its vs. Union Of INDIA

Held

The Court held that the time gap between the show cause notice (September 3, 2022) and the impugned order (September 12, 2022) was only 8 clear days, which falls "desperately short" of satisfying the concept of a reasonable opportunity of being heard. The Court reasoned that while Section 73 of the CGST Act does not explicitly stipulate a response time, it contemplates a reasonable opportunity. Given that Section 73(8) allows 30 days for payment of tax, interest, and penalty to conclude proceedings, a response to the show cause notice should also be afforded a reasonable period, which the Court considered to be 30 days. Furthermore, the Court noted that the show cause notice appeared to be lacking in material particulars, making it vulnerable to judicial review. Consequently, the Court set aside both the show cause notice and the demand order, granting liberty to the Revenue to issue a fresh, legally valid show cause notice and proceed after affording a reasonable and sufficient opportunity of being heard to the petitioner. The Court also awarded costs of Rs. 10,000/- to the petitioner.

Facts

Raymond Limited, the petitioner, challenged a show cause notice dated September 3, 2022, and a subsequent demand order dated September 12, 2022, both issued under Section 73 of the Central Goods and Services Tax (CGST) Act, 2017, by the Deputy Commissioner of State Tax, Chhindwara. The petitioner argued that the show cause notice, which allowed 30 days for a response, was followed by the demand order within nine days, violating the principle of audi alteram partem. Additionally, the petitioner contended that the show cause notice was not self-contained, failing to provide material facts, thus hindering their ability to respond, and that no personal hearing was granted. The High Court had previously restrained coercive steps against the petitioner.

Key Issues

1. Whether the issuance of a demand order dated September 12, 2022, within nine days of a show cause notice dated September 3, 2022, which afforded 30 days for response, violates the principle of audi alteram partem and the requirement of reasonable opportunity, as contemplated under Section 73 of the CGST Act? 2. Whether the show cause notice dated September 3, 2022, was vague and lacked sufficient material particulars, thereby preventing the petitioner from effectively responding and violating the principles of natural justice? Petitioner's Arguments: - The short period between the show cause notice and the demand order (9 days vs. 30 days provided) denied a reasonable opportunity to respond, violating audi alteram partem. - The show cause notice was not self-contained, failing to disclose the adverse material facts, thus disabling the petitioner from responding. - An opportunity for personal hearing was not afforded. Revenue's Arguments: - The judgment records no specific arguments made by the respondents.