Kemexel Ecommerce Pvt. Ltd. Vs State of Punjab And Others (Punjab And Haryana High Court)
Summary: The Punjab and Haryana High Court allowed the writ petition filed by KEMEXEL ECOMMERCE PVT. LTD. challenging the adjudication/assessment order dated 23.08.2024 on the ground that no opportunity of personal hearing was granted before passing the adverse order. The Court held that Section 75(4) of the Central Goods and Services Tax Act, 2017 creates a statutory obligation to provide an opportunity of hearing where an adverse decision is contemplated, irrespective of whether the assessee has submitted a written response.
The petitioner was a company having its registered office in Gurugram and was also registered with the GST authorities in Punjab. A show cause notice concerning FY 2019-20 was issued under Section 73 of the 2017 Act. Although the notice allowed the petitioner to respond in writing, no date, time or venue for personal hearing was specified. The petitioner did not submit a written response.
A reminder dated 01.08.2024 was subsequently issued. The reminder again contained “not applicable” against the columns relating to the date, time and venue of personal hearing. The petitioner did not file a written response even thereafter. The respondent authorities then passed the adjudication/assessment order dated 23.08.2024 requiring payment of the tax demanded.
The show cause notice disclosed tax and other dues totalling Rs.37,11,606/-, comprising SGST of Rs.8,35,032/-, interest of Rs.6,98,407/- and penalty of Rs.83,503/-; CGST of the same amounts; and IGST of Rs.2,46,708/-, interest of Rs.2,06,343/- and penalty of Rs.24,671/-.
The Court examined the show cause notice dated 24.05.2024 and reminder dated 01.08.2024. It specifically noted that both documents showed “NA” or “not applicable” against the date, time and venue of personal hearing.
The Court then referred to Section 75(4) of the CGST Act, which provides that an opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where an adverse decision is contemplated against such person.
According to the Court, the statutory language leaves no doubt that, before any adverse decision is contemplated against an assessee, the revenue is under a statutory obligation to provide an opportunity of hearing. The Court rejected the State counsel’s submission that no hearing was required because the petitioner had not filed a written response to the show cause notice or reminder.
The Court observed that, even in the absence of a written response, an opportunity of hearing could have enabled the petitioner to produce its original records, including account books and ledgers, file written arguments in defence and attempt to satisfy the Assessing Officer to withdraw the show cause notice.
Consequently, the Court accepted the petition and set aside the impugned adjudication/assessment order dated 23.08.2024. However, liberty was granted to the respondent-revenue to proceed against the petitioner, but only after following the provisions of law, including Section 75(4) of the 2017 Act. No costs were awarded.
FULL TEXT OF THE JUDGMENT/ORDER OF HIGH COURT OF PUNJAB AND HARYANA
Through the instant petition, challenge is made to the adjudication/assessment order dated 23.08.2024 (Annexure P-1) on the ground that prior to issuance of such order no opportunity of hearing was granted to the petitioner which not only violates the principles of natural justice but also contravenes Section 75(4) of the Central Goods and Services Tax Act, 2017 (for short, ‘the 2017 Act’).
2. The facts which lie in the narrow compass are that the petitioner is a company having its registered office in Gurugram. It is also registered with the GST authorities in the State of Punjab. A show cause notice, pertaining to the financial year 2019-20, was issued to the petitioner by the respondent-authorities in the State of Punjab under Section 73 of the 2017 Act, granting an opportunity to the petitioner to respond in writing to the allegations made therein. However, no date, time or venue for the grant of personal hearing was mentioned therein. When, in response to the said show cause notice, the petitioner did not file any written response, a reminder dated 01.08.2024 was issued to the petitioner. However, in this reminder also against the columns of date, time and venue for personal hearing “not applicable” was found mentioned. The petitioner did not file a written response. Thereafter, the respondent-authorities passed the adjudication/assessment order dated 23.08.2024 requiring the petitioner to deposit the tax demanded through it. It is in these circumstances that the petitioner has knocked the doors of this Court for the aforesaid relief.
4. Learned counsel for the parties have been heard and with their able assistance, the records of the case have also been perused.
5. Show cause notice dated 24.05.2024 and the reminder dated 01.08.2024 issued to the petitioner by the respondent – GST authorities, pertaining to the financial year 2019-20 are both reproduced below for ready reference:-
Show cause notice Dated:24.05.2024
Reference No.-ZD030524058626D
Date-24-05-2024
To
GSTIN/ID: 03AAFCK9097H2Z7
Name: KEMEXEL ECOMMERCE PRIVATE LIMITED
Address: Bholapur, Hadbast no-238 Chabbewal, Khewat no-255, Khatoni no-288, Khasra no.38//3/1, Chandigarh road, Ludhiana, Ludhiana, Punjab, 141014
Tax Period: APR 2019-MAR-2020
Act/Rules Provisions-NA
FY-2019-2020
Section/sub-section under which SCN is being issued-73
Summary of Show Cause Notice
a) Brief Fact of the Case: SCN Attached
b) Grounds: SCRUTINY
c) Tax and other dues:
Sr. No. |
Tax Rate (%) |
Turnover |
Tax period From |
Tax period To |
Act |
POS (Place of supply) |
Tax |
Interest |
Penalty |
Fee |
Others |
Total |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
1 |
0 |
0.00 |
APR 2019 |
MAR 2020 |
SGST |
NA |
8,35,032.00 |
6,98,407.00 |
83,503.00 |
0.00 |
0.00 |
16,16,942.00 |
2 |
0 |
0.00 |
APR 2019 |
MAR 2020 |
CGST |
NA |
8,35,032.00 |
6,98,407.00 |
83,503.00 |
0.00 |
0.00 |
16,16,942.00 |
3 |
0 |
0.00 |
APR 2019 |
MAR 2020 |
IGST |
Punjab |
2,46,708.00 |
2,06,343.00 |
24,671.00 |
0.00 |
0.00 |
4,77,722.00 |
Total |
19,16,772.00 |
16,03,157.00 |
1,91,677.00 |
0.00 |
0.00 |
37,11,606.00 |
||||||
Show Cause Notice is attached.
Supporting documents attached by officer:
Details of personal hearing and due date to file reply:
| Sr. No. | Description | Particulars |
|---|---|---|
| 1. | Date by which reply has to be submitted | 24.06.2024 |
| 2. | Date of personal hearing | NA |
| 3. | Time of personal hearing | NA |
| 4. | Venue where personal hearing will be held | NA |
Reminder Dated:01.08.2024
Reminder-1
Reference No: ZD030824000810Y
Date: 01/08/2024
To
GSTIN/ID: 03AAFCK9097H2Z7
Name: KEMEXEL ECOMMERCE PRIVATE LIMITED
Address: Bholapur, Hadbast no-238 Chabbewal, Khewat no-255, Khatoni no-288, Khasra no.38//3/1, Chandigarh road, Ludhiana, Ludhiana, Punjab, 141014
SCN Reference No: ZD030524058626D
Date: 24/05/2024
Previous reminder reference nо:ΝΑ
Reminder
With reference to the show cause notice referred above, neither you have filed any reply, nor you have appeared on the date mentioned in the notice to explain the reasons for the charges mentioned therein.
You are once again requested to furnish the reply by the date mentioned in table below.
You may appear before the undersigned for personnel hearing either in person or through authorized representative for representing your case on the date, time and venue, if mentioned in table below.
You are also requested to bring documents mentioned in the attached annexure, if any, relating to case on the date of hearing and other information called therein.
| Sr. No. | Description | Particulars |
|---|---|---|
| 1. | Date by which reply has to be submitted | 06/08/2024 |
| 2. | Date of personal hearing | NA |
| 3. | Time of personal hearing | NA |
| 4. | Venue where personal hearing will be held | NA |
6. A perusal of the afore referred show cause notice dated 24.05.2024 and the reminder dated 01.08.2024 clearly reveals that against the column of date, time and venue for personal hearing “NA or not applicable” finds mentioned.
7. At this stage, Section 75(4) of the 2017 Act needs to be referred to. The same reads as under:-
“An opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person.”
8. A perusal of the afore quoted provision leaves no room for doubt that before any adverse decision is even contemplated against an assessee under the 2017 Act, the respondent-revenue is under a statutory obligation to provide to the assessee an opportunity of hearing which, admittedly, in the case in hand, has not been done.
9. The submission raised by the learned State counsel that since to the show cause notice or the reminder, the petitioner did not file a written response, no opportunity of hearing was required to be granted to the petitioner is required to be considered only to be rejected because under Section 75(4) of the 2017 Act, an assessee is statutorily entitled to be granted an opportunity of hearing before any adverse decision is even contemplated against him. Further, in the absence of a written response, if the petitioner had been granted an opportunity of hearing, it could, at the time of such hearing, produce its original record in the form of account books, ledgers etc. and/or file written arguments in defence and make an attempt to satisfy the Assessing Officer to withdraw the show cause notice served upon him.
10. In the light of the above discussion, the present petition is accepted, resulting in the setting aside of the impugned adjudication/assessment order dated 23.08.2024 (Annexure P-1). However, liberty is granted to the respondent-revenue to proceed against the petitioner but only after following the provisions of law including Section 75(4) of the 2017 Act.
11. No costs.
