M/S Modern Sales Agency vs. State Of Gujarat

Held

The Court held that the order passed by the Deputy Commissioner of State Tax was in violation of the principles of natural justice. The Court noted that three notices were issued on 16.04.2026, providing three different hearing dates (18.04.2026, 21.04.2026, and 24.04.2026), and the proceedings sheet did not reflect that any hearing had actually taken place on these dates. This, coupled with the fact that the petitioner was not heard, led the Court to conclude that the order was unsustainable. The Court accepted the apology tendered by the Deputy Commissioner and the explanation regarding the portal's functioning as an administrative necessity. However, the Court emphasized that the lack of a proper hearing was a critical flaw. Consequently, the impugned order dated 26.05.2026 was quashed and set aside. The Court was informed that the petitioner would be offered an opportunity for a fresh hearing, and a new order would be passed thereafter. The petition was disposed of on these terms.

Facts

The petitioner, M/s Modern Sales Agency, filed a Special Civil Application challenging an Order-in-Appeal dated 26.05.2026 passed by the Deputy Commissioner of State Tax. The petitioner had filed an appeal under Section 107 of the Central Goods and Service Tax Act, 2017, and Gujarat Goods and Service Tax Act, 2017, depositing 10% of the disputed tax amount, Rs. 10,41,316/-. The petitioner contended that despite requesting a personal hearing and depositing the pre-deposit, they were not heard on any of the three hearing dates (18.04.2026, 21.04.2026, and 24.04.2026) for which notices were issued. The impugned order, however, recorded that the petitioner's advocate was heard. The petitioner argued this violated principles of natural justice.

Key Issues

1. Whether the issuance of three notices of the same date, providing three different hearing dates, and the subsequent passing of an order without affording a personal hearing to the petitioner, violates the principles of natural justice under Section 107 of the Central Goods and Service Tax Act, 2017, and the Gujarat Goods and Service Tax Act, 2017? Petitioner's Arguments: The petitioner argued that the issuance of three notices with different hearing dates, all dated 16.04.2026, did not constitute a proper hearing and violated the principles of natural justice. They emphasized that neither they nor their advocate were heard on any of the scheduled dates, despite the impugned order stating otherwise. Reliance was placed on the proviso to Section 107(9) regarding the limit on adjournments and the judgment in Regent Overseas Pvt. Ltd. v. Union of India. Revenue's Arguments: The revenue, through the Assistant Government Pleader, initially submitted a report explaining the portal's functioning as a systematic scheduling process. Subsequently, the Deputy Commissioner present before the court expressed regret and apologized for the issuance of the notices, stating it was an administrative necessity and not an intentional manipulation. The revenue acknowledged that the proceedings sheet did not reflect that a hearing had taken place.