Ridha Polymers Vs State of Kerala (Kerala High Court)
The Kerala High Court delivered its judgment in a case concerning the denial of proper opportunity of hearing under the CGST/KSGST Act, 2017, involving Ridha Polymers, a registered dealer. The dispute pertains to the assessment year 2017-2018, where the petitioner challenged Ext.P5 Order-in-Original passed under Section 74 of the CGST/KSGST Act. The order rejected the petitioner’s claim for input tax credit despite a prior written explanation (Ext.P3) submitted in response to a show-cause notice dated 5th August 2024 (Ext.P2). The petitioner contended that the hearing was not conducted appropriately and that the reasons for invoking Section 74 in Ext.P2 were vague, preventing an effective defense.
The petitioner argued that when their authorized representative, a Cost Accountant, appeared for the hearing, he was directed to meet a clerk named Mukesh instead of the 3rd respondent directly. The petitioner claimed that the order was passed as if they had been personally heard by the 3rd respondent, while in reality, no proper hearing occurred. It was further contended that the show-cause notice failed to provide specific reasons for the rejection of input tax credit, making it difficult for the petitioner to respond effectively.
In response, the 3rd respondent filed a counter affidavit denying these allegations, asserting that the petitioner’s authorized representative was initially directed to Mr. Mukesh for document verification. The 3rd respondent maintained that the petitioner was ultimately heard by the 3rd respondent before passing the order. The Court examined the counter affidavit and the affidavit (Ext.P4) submitted by the petitioner’s representative, which detailed that during the hearing on 30 January 2025, the representative was directed to the subordinate officer, who merely collected files and client details, without conducting a substantive hearing. The counter affidavit admitted the initial direction to the subordinate officer but emphasized that this was for document verification and insisted that the petitioner was later heard.
