Star Food and Beverages Vs State of Punjab and Another (Punjab and Haryana High Court)
Summary: The Punjab and Haryana High Court, in Star Food and Beverages Vs State of Punjab and Another, set aside a GST adjudication order passed without proper consideration of the taxpayer’s written submissions and supporting evidence. The petitioner had received a show cause notice dated 25 September 2023 under Section 74 of the Punjab Goods and Services Tax Act, 2017, relating to the tax period April 2018 to March 2019. In response, the petitioner submitted a detailed written reply on 25 October 2023 and subsequently produced supporting evidence during the personal hearing. However, the adjudicating authority passed an order dated 24 April 2024 without addressing the explanations or examining the evidence submitted by the petitioner. Instead, the adjudication order substantially reproduced the contents of the show cause notice and merely concluded that the petitioner’s written response was unsatisfactory. Aggrieved by the failure to consider its defence, the petitioner approached the High Court challenging the validity of the adjudication order.
The Division Bench comprising Justice Deepak Sibal and Justice Lapita Banerji examined the impugned adjudication order and observed that neither the petitioner’s detailed written response nor the evidence produced during the personal hearing had been considered by the tax authorities. The Court specifically noted that the adjudication order was virtually a copy of the show cause notice, with only a general statement that the taxpayer’s reply was not satisfactory. Such an approach demonstrated a complete non-application of mind by the adjudicating authority. Accordingly, the High Court held that the adjudication order dated 24 April 2024 could not be sustained and set it aside. However, the Court expressly granted liberty to the respondents to initiate fresh proceedings against the petitioner in accordance with law. The writ petition was therefore allowed. The ruling emphasises that GST adjudication requires genuine consideration of the taxpayer’s submissions and supporting material, and an order cannot be sustained merely by reproducing the allegations contained in the show cause notice without addressing the defence presented during adjudication.
FULL TEXT OF THE ORDER OF PUNJAB AND HARYANA HIGH COURT
A show cause notice dated 25.09.2023 under Section 74 of the Punjab Goods and Services Tax act, 2017, pertaining to the tax period April 2018 to March 2019 was issued to the petitioner, to which the petitioner filed a detailed response dated 25.10.2023. Thereafter, during the personal hearing granted to the petitioner, evidence in support of the petitioner’s detailed response dated 25.10.2023 was also produced but a perusal of the impugned adjudication order dated 24.04.2024 reveals that neither the justification offered by the petitioner through its written response dated 25.10.2023 nor the evidence produced by it during the course of personal hearing have been considered by the respondents as the impugned adjudication order is found to be a virtual copy of the show cause notice and in the end whereof, it is simply stated that the petitioner’s written response was not found to be satisfactory.
2. In the light of the above, the impugned adjudication order is found to have been passed without any application of mind. Therefore, the impugned adjudication order dated 24.04.2024 (Annexure P-7) is set aside. However, the respondents are granted liberty to proceed afresh against the petitioner, in accordance with law.
3. The petition is allowed in the above terms.
