Case Law Details
Adama India Private Limited Vs Union of India (Karnataka High Court)
The petitioner is a registered dealer. An audit was conducted. It filed reply. Audit report (Form ADT-02) was issued. The pre-show cause notice (DRC-01A) was issued. Pursuant to which, show cause notice (DRC-01) was issued. The petitioner filed reply submitting documents. The same was not considered as a reply and reminder was issued. The petitioner sought time to file detailed reply and filed the reply seeking personal hearing. Thereafter, the petitioner filed detailed reply. However, without considering the said reply and without granting a hearing, order came to be passed confirming demand of about Rs. 23 crores. The same was challenged in writ petition.
The Hon’ble High Court of Karnataka (Dharwad Bench) allowed the writ petition and set aside the impugned order.
It held:
(i) section 73(9) mandates that the reply of the assessee must be considered, which had not been done;
(ii) section 75(4) mandates a hearing after reply has been filed where request is received in writing;
(iii) section 73(10) mandates the time limit provided for passing the order; all provisions use the word “shall”;
(iv) section 107(11) does not empower the appellate authority to remand the matter back for non observance of provisions;
(v) alternate remedy is not a bar where there is violation of principles of natural justice;
(vi) follows coordinate bench judgments, Hon’ble High Court of Chhattisgarh judgment and Hon’ble High Court of Allahabad – Jugdments;
(vii) deals with Commerical Steel- Hon’ble Supreme Court judgment and explains the same;
(viii) remands the matter back to the adjudicating authority for de-novo consideration, on payment of costs of Rs.50,000/- by petitioner for delay in filing reply.
The matter was argued by Ld.Counsel Bharat Raichandani
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
Heard the learned counsel Sri Bharat Raichandani on behalf of learned counsel Sri Nagaraj Appannanavar, for the petitioner, the learned Additional Advocate General Sri Gangadhar J.M. on behalf of learned Additional Government Advocate for respondent No.3 and learned counsel for respondents No.1 and 2 Sri M.B.Kanavi and Sri G.S.Hulmani, respectively.
2. The petitioner has filed this petition seeking the following reliefs.
a) Issue a writ of prohibition, or any other writ, order or direction as this Hon’ble Court may deem fit and proper in preventing Respondent No.2 or functionaries working under its office from proceeding in excess or abuse of their jurisdiction in demanding the tax amount along with interest and penalty.
b) Issue a writ of certiorari, or any other writ, order or direction as this Hon’ble Court may deem fit and proper, by quashing the order 30.03.2024 passed by the 3rd Respondent enclosed as Annexure-R demanding tax amount along with interest and penalty in as illegal and untenable in law, in the facts and circumstances of the case;
c) Issue a writ of certiorari, or any other writ, order or direction as this Hon’ble Court may deem fit and proper, by quashing and setting aside the impugned Notification No.9/2023 dated 31.03.2023 issued by Respondent no.2 Annexure-S being ultravires the Constitution of India and provisions of CGST Act, 2017.
d) Issue a writ of mandamus, or such other writ, order or direction, as this Hon’ble Court may deem fit and proper, setting aside the in Form GST DRC 07 vide No. ACCT (AUDIT-2)/Blr/GST/2023-24/1878 passed by the 3rd Respondent dated 30.03.2024 enclosed as Annexure-R and holding and declaring that in Form GST DRC-07 vide No.ACCT(AUDIT-2)/ Blr/GST/2023-24/1878 passed by the 3rd Respondent dated. 30.03.2024 enclosed as Annexure-R passed by the Respondent is in contravention of the principles of natural justice enshrined in sub-section (4) and (5) of Section 75 of CGST Act, 2017, in the facts and circumstances of the case and etc.
e) To pass such other orders, directions and writs as this Hon’ble High Court may deem fit in the facts and circumstances of the case, and in the interests of justice, including the costs of this writ petition.
3. It is the case of the petitioner that it is an Indian Subsidiary of Adama Agricultural Solutions Limited Israel. Petitioner is engaged in the business of trading pesticides, insecticides, fungicides, herbicides and crop enhancement products. It is registered with the jurisdictional GST authorities vide GSTIN 29AABCM8797N1ZE under the Central Goods and Services Tax Act, 2017 (‘CGST Act’, for short). Respondent No.3 initiated audit proceedings by issuing notice under section 65(1) of the CGST Act dated 13.10.2023 and sought certain documents from the petitioner. Thereafter, an endorsement dated 27.10.2023 was issued to the petitioner seeking details as required in Form GST ADT-01. Petitioner filed its reply by letter dated 03.11.2024 along with documents sought by respondent No.3 including the P and L accounts, auditors report, copies of GSTR-9 and GSTR-9C, sales report, etc., and subsequently filed detailed objection/reply on 29.11.2023 along with documents.
4. This being the state of affairs, respondent No.3 issued draft audit report on 05.12.2023, against which petitioner filed its reply/objections along with supporting documents. Subsequently, respondent No.3 issued audit report informed GST ADT-02 on 20.12.1993. Thereafter, petitioner was in receipt of notice in Form GST DRC-01A dated 22.12.2023, wherein the tax payable by the petitioner was ascertained by respondent No.3. On the show cause notice issued by respondent No.3, petitioner filed a response with supporting documents to substantiate the claim. Subsequent to the letter dated 30.01.2024, respondent No.3 got issued a reminder letter 19.02.2024, wherein the respondent No.3 scheduled a personal hearing on 27.02.2024. In response to the said letter for personal hearing, petitioner filed an adjournment letter on the 27.02.2024 requesting to file additional reply and to attend personal hearing and thereafter petitioner filed a detailed reply/objection statement to show cause notice once again by letter dated 12.03.2024 along with supporting documents along with the letter dated 14.03.2024, the petitioner specifically requested for personal hearing before disposing of the matter.
5. It is the case of petitioner that without even considering the documents submitted in a proper perspective and without affording even a personal hearing, respondent No.3 herein proceeded to issue an order in Form GST DRC-07 vide No.ACCT (Audit-2)/Blr/GST/2023-24 on 30.03.2024 demanding a sum of Rs.22,99,62,468/- towards tax, interest and penalty. The same was confirmed by the impugned order. The petitioner being aggrieved by the said impugned order is before this Court primarily contending that the order passed by respondent No.3 is wholly arbitrary, illegal, unconstitutional and without jurisdiction for the reason that petitioner had filed his reply to GST ADT-01 and filed a reply to the draft audit report and so also filed a reply to the show cause notice. But however, respondent No.3 conveniently neglected and ignored these processes having been undertaken by the petitioner and in the impugned order has gone on to hold that the petitioner has not filed any reply and pass the order adverse to the interest of the petitioner, which is impugned and according to the petitioner the same is liable to be set aside on this very ground alone.
6. It is also contended by learned counsel Sri Bharat Raichandani that the impugned order is not a speaking order. The same is liable to be set aside. He further contends that the impugned order was passed under section 73 of the CGST Act and section 73(9) of the Act requires a proper officer to consider the representation made by petitioner before passing the order. He further contends that there is no proper clarity in the order passed by respondent No.3 and he has failed to give reasons in the impugned order and also to take into consideration the reply provided by the petitioner. All this has not been considered and a cryptic order has been passed, which is arbitrary and unsustainable in law. It is also contended by learned counsel for the petitioner that under section 75(6) of the CGST Act, it mandates the authority to set out the basis of its decision. Whereas, in the present case respondent No.3 has failed to give reasons in support of its conclusion. Therefore, he contends that the impugned order is totally bereft of any reasons and the same would stand vitiated due to non application of mind and non taking into consideration of the reply filed by the petitioner which does not find a place in the impugned order.
7. It is further contended by the learned counsel for the petitioner that there is a gross abuse of the process of Court, there is violation of the principles of natural justice and the petitioner’s fundamental rights have been infringed as there is no fair play and equity in the impugned order. While passing the impugned order, which is in violation to the provisions of section 75(4) of the CGST Act, it is also contended by learned counsel for the petitioner that respondent No.3 has not at all afforded any opportunity and in a hasty manner has passed the impugned order without affording opportunity to the petitioner for the personal hearing which was sought by the petitioner and fixed the date of hearing for filing the reply and hearing on the very same day, i.e., on 27.02.2024. Therefore, learned counsel for the petitioner contends that the provisions prescribed under the CGST Act mandates that respondent No.3 provides sufficient opportunity for filing reply and sufficient opportunity for personal hearing before passing any final determination with regard to tax, interest and penalty imposition.
8. It is also contended by learned counsel for the petitioner that even if it is assumed that no personal hearing is provided, respondent No.3 is duty bound under law to afford an opportunity of being heard before passing any adverse order, which would affect the interest of the petitioner. Therefore, he contends that the objection raised by the respondents with regard to non maintainability of the writ petition would not come in the way of this Court entertaining the writ petition for the reason that respondent No.3 has infringed the fundamental rights of the petitioner and has violated the principles of natural justice by not providing suitable opportunity of filing reply and fair hearing to the petitioner as is contemplated under the statute.
9. In the background of these arguments, learned counsel for the petitioner has relied upon the following judgments in support of his case.
1. M/s. Kronos Solutions India Private Limited v. UOI, Writ Tax No. 1417 of 2023(All. HC)
2. Arun Kumar Bose v. Income-tax Officer, [2024] 158 com 282 (Calcutta)
3. Breakbounce India (P.) Ltd. v. Commr. of CT, [2024] 163 com 602 (Karnataka)
4. Bangalore Golf Club v. CTO (Enforcement), [2024] 164 com 51 (Karnataka)
5. Principle Mahendra (P.) Ltd. v. DCCT, [2023] 152 com 120 (Karnataka)
6. AMZ International v. State Tax Officer, (2024) 162 com 729 (Madras) dated 15.04.2024
8. Goutam Bhowmik vs. State of West Bengal and Ors 2024-TIOL-108-HC-KOL-GST
9. Mahindra and Mahindra Limited v. UOI & Ors., WA No.172 of 2024
10. KEC International Ltd. v. UOI & Ors.
11. Sri Bharath Constructions v. Asst. Commr. [2023] 146 com 358 (Andhra Pradesh)
12. K.J. Enterprises vs. State of U.P. and Ors. [TS-31- HC(ALL)-2024-GST]
13. Shree Sai Palace vs State of U.P. & ors [TS-147-HC(ALL)-2024-GST]
14. Ultratech Cement Ltd. vs. UOI & ors [TS-36-HC(MP)- 2023-GST]
15. Bharat Mint and Allied Chemicals vs CCT & 2 Ors. [TS- 269-HC(ALL)-2022-GST]
10. Per contra, Sri Gangadhar J.M., learned Additional Advocate General along with Addl. Government Advocate representing the State vehemently contends that primarily the petition filed by the petitioner itself is not maintainable in law as there is alternative efficacious remedy available to the petitioner, if he is aggrieved by any of the orders passed by respondent No.3. It is also contended by learned Additional Advocate General that the entire process and procedure of the Act and the Rules have been followed. Principles of natural justice have been duly followed by providing suitable opportunities. Notice has been issued, despite which reply was not filed. Sufficient time was given and on repeated reminders the petitioner failed to file reply or file objection statement, despite which again notice was given for personal hearing and the same was not utilized by the petitioner. The request by the petitioner for personal hearing was considered and a date was fixed for filing of reply and personal hearing, despite which the same was not attended to and the opportunity was not utilized and the request of the petitioner as provided in Annexure-P dated 12.03.2024 for providing an opportunity of being heard was considered and as the petitioner had sent a letter dated 27.02.2024 to the respondent No.3 stating that he would submit his response positively by 01.03.2024, the same was provided and it is further contended by learned Additional Advocate General that after issuance of notice, since there was no reply filed, it was treated as there is no objections towards the liability when DRC-01A was confirmed in Form GST DRC-01 and since no objections and explanation was given by the taxpayer, though certain documents were submitted, they cannot be held as to be replied nor explanation for the observations issued in Form DRC-01. It is also contended that respondent No.3 provided a personal hearing and thereafter followed by the reminder to file reply and also to make use of personal hearing on 27.02.2024. Despite providing these opportunities for filing reply and personal hearing and provide the explanations, the taxpayer has not responded neither availed the opportunity of filing of reply accordingly, passed the order which is impugned herein.
11. Learned Additional Advocate General vehemently contends that apart from the preliminary objection of petition being not maintainable on the ground of there being an alternative efficacious remedy available in law, which is in the form of an appeal provided under the statute. The procedures provided in the statute has been followed by providing reasonable opportunity to file reply/objections and an opportunity of personal hearing was also provided to the petitioner/taxpayer which was not availed. Despite granting an extension to file reply by 01.03.2024 and the last date for passing the order is 31.03.2024, respondent No.3 has proceeded in accordance with law, which cannot be termed as illegal, arbitrary or violative of principles of natural justice and when everything has been followed and an extension has also been given.
12. Learned AAG further contends that this is a classic case of taking undue advantage of the several opportunities provided by respondent No.3 to file the reply after issuance of show cause notice and several reminders having been sent and thereafter provided an opportunity of personal hearing, which has not been utilized by the petitioner/taxpayer only with an ulterior motive and oblique intention to drag on and prolong the matter. So that no order is passed before 30.03.2024, thereby making it time barred. Such irresponsible taxpayers trying to make undue advantage of the delay to frustrate the claim of the revenue should not be accepted by the Court and there should not be shown any mercy in the guise of non-providing of opportunity of hearing and the question of violation of principles of nature justice does not arise in this case. On these grounds, learned Additional Advocate General seeks to dismiss the petition as the petitioner can avail alternative efficacious remedy by filing an appeal as provided under Section 107(1) of the KGST Act, 2017.
13. Learned AAG relies upon the following Judgments in support of his case.
(i) Assistant Commissioner of State Tax vs. Commercial Steel Ltd., 2021 (52) G.S.T.L. 385 (S.C.).
(ii) Abhijeet Ferrotech Ltd., vs. Assistant Commissioner (ST), (2023) 3 Centax 1 (S.C.).
(iii) Kohinoor Floors Pvt. Ltd., vs. State Tax Officer, (2023) 13 Centax 163 (S.C.).
(iv) Falcon Enterprises vs. State of Gujarat, 2021(49) G.S.T.L. 337 (S.C.).
(v) State of Uttar Pradesh and Others vs. Kay Pan Fragrance Private Limited, (2020) 5 SCC 811.
(vi) The Chairman, Board of Mining Examination and Chief Inspector of Mines and Another vs. Ramjee, AIR 1977 SC 965.
(vii) United Bank of India vs. Satyawati Tondon and others, (2010) 8 SCC 110.
(viii) State of Maharastra and others vs. Greatship (India) Limited, 2022 SCC OnLine 1262.
(ix) A Judgment of this Court in the case of M/S. AKR Constructions Limited vs. The Commissioner Central Goods and Services Tax and Central Excise and others, WP.No.100278/2024 (T-RES), 25.01.2024.
14. Having heard learned counsel for both parties fundamentally, it is well laid down principle of law that when the revenue issues a show cause notice, opportunity has to be given to the taxpayer to submit reply and thereafter an opportunity of hearing is also contemplated under the Act, 2017. In the present case on hand, it is the case of petitioner’s that after issuance of show cause notice, he has filed the reply and after the audit report, he has filed the objections and an explanation. However, the same was not taken into account and despite making a request for personal hearing, the same was not granted and hastily respondent No.3 has proceeded to pass the impugned order by imposing tax, interest and penalty. Chapter XV of the Central Goods and Services Tax Act, 2017 deals with demand and recovery. Section 73 of the CGST Act, 2017 deals with determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized for any reason other than fraud or any willful misstatement or suppression of facts. Section 73(9) reads as under :
“73(9) The proper officer shall, after considering the representation, if any, made by person chargeable with tax, determine the amount of tax, interest and a penalty equivalent to ten percent of tax or ten thousand rupees, whichever is higher, due from such person and issue an order.”
15. These provisions clearly establish the fact that the procedures to be contemplated herein are mandatory in nature, where the words used are the proper officer shall after considering the representation, if any made by a person chargeable with tax, determine the amount of tax, interest and penalty equivalent to ten percent of tax or ten thousand rupees, whichever is higher, due from such person and issue an order. Further, sub-Section (10) of the said section deals with the proper officer shall issue the order under sub-Section (9) within three years from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilized relates to or within three years from the date of erroneous refund. Further, Section 75(4) read 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.”
16. On a bare understanding of these provisions, it can be understood in the common parlance that the opportunity of filing of reply to the show cause notice and thereafter consider the representation made and shall pass the order and also provide an opportunity of hearing when any such request is made by the person chargeable with tax. Therefore, these provisions contemplate process to be mandatory in nature to the respondent authorities to act in the manner as provided under the statute. In the present case on hand, it is the case of respondents that despite providing suitable opportunity, the petitioner/taxpayer has not filed reply in Part-B and he has not filed objections with explanation instead the taxpayer has submitted several documents. He has not filed the reply on time despite granting sufficient opportunity and reminders requesting and insisting the petitioner/taxpayer to file his reply on or before the relevant date stipulated therein and subsequently adhering to the request, provided an opportunity of personal hearing on 22.01.2024 and thereafter again a further reminder to file the reply for DRC-01 and to make use of the opportunity of personal hearing which was scheduled on 27.02.2024. However, the taxpayer having nothing utilized these many opportunities provided by respondent No.3, it would be farfetched to say that the revenue has to wait till the petitioner/taxpayer files his reply and attends the personal hearing and does not bother for the opportunity granted despite extension being provided. This clearly goes to show that there is ulterior motive and oblique intention of the taxpayer to prolong the proceedings till the last date in order to defeat the rights vested with the authorities and thereby to make this as a time barred claim.
17. On perusal of records, it is seen by the letter dated 19.02.2024 issued by respondent No.3 that a reminder was given wherein the date by which reply was to be submitted is slated to be on 27.02.2024 and the date of personal hearing was also provided on the same day i.e., on 27.02.2024 and the time for personal hearing to be at 11.00 a.m. Thereafter, the request for extension in submitting the reply to show cause notice was taken into consideration, in view of the petitioner having filed a letter dated 27.02.2024 seeking extension to submit his response by 01.03.2024 positively and thereafter the petitioner/taxpayer has filed his response to the show cause notice on 12.03.2024 taking several contentions. In the said response to the show cause notice, petitioner has sought for an opportunity of being heard before passing of final order by the respondent authorities. However, while passing the impugned order on 30.03.2024, the reply dated 12.03.2024 has not been taken into account by the respondent authorities and so also the personal hearing which was sought for by the taxpayer was not provided under the guise that the petitioner has not utilized the date so fixed by the respondent i.e., on 27.02.2024.
18. Apparently, it is seen from the impugned order that the response to the show cause notice has not been adverted to and the personal hearing which was sought for by the letter dated 12.03.2024 was also not provided to the petitioner and an impugned order came to be passed on 30.03.2024 under Section 73(9) and (10) of the KGST Act, 2017. In this background, it is to be seen whether the opportunity of filing reply and the opportunity of personal hearing is mandatory in nature as canvassed by the learned counsel for the petitioner. This Court has already dealt with the provisions of Section 73(9) and (10) and Section 75(4) of the Act, 2017 which is unambiguous with regard to a mandatory requirement as the word being used is ‘shall’.
19. Learned counsel for the petitioner has relied upon the Judgment of a coordinate Bench of this Court in the case of Breakbounce India (P.) Ltd., vs. Commissioner of Commercial Taxes, [2024] 163 taxmann.com 602 (Karnataka), wherein it is held at paragraph Nos.5 and 6 as under:
“5. It is noticed that the order passed is an ex-parte order without the say of the petitioner. Though the electronic mode of service may be sufficient, however, in the peculiar facts of this case, taking note of the substantive rights involved, it would serve the interest of justice by remanding the matter and granting another opportunity to the petitioner to participate and make out his reply to the show cause notice dated 27.09.20023. If the objective of Section 75(4) of the Act is kept in mind, requirement is of providing an opportunity wherever adverse order is sought to be passed.
6. Taking note of such legal mandate, it would be appropriate to permit the petitioner to participate in the adjudication process and accordingly, the order at Annexure-A is set aside. Consequential recovery proceedings initiated by the 2nd respondent at Annexure-B also stands set aside. The matter is restored to the stage of show cause notice. Petitioner is permitted to make out his reply to the show cause notice within a period of four weeks from receipt of certified copy of the order and question of raising any ground on limitation would not arise. All contentions are kept open.”
20. So also another Judgment of a coordinate Bench of this Court in the case of Bangalore Golf Club vs. Commercial Tax Officer (Enforcement), [2024] 164 taxmann.com 51 (Karnataka), wherein similar provisions of Section 75(4) of the Act, 2017 was for consideration as the petitioner therein was not provided reasonable opportunity as contemplated under Section 75(4) of the Act, 2017 before adverse orders passed against it.
21. Another Judgment of a coordinate bench of this Court in the case of Principle Mahendra (P.) Ltd. Vs. Deputy Commissioner of Commercial Taxes, [2023] 152 taxmann.com 120 (Karnataka) wherein at paragraph Nos.2 and 6 held as under :
“2. It is the primary contention of the petitioner that the impugned order passed is without affording an opportunity of hearing and that their reply filed in Form DRC 06 has been rejected as having been belatedly filed. It is submitted even if reply was filed belatedly, the obligation under section 75 of the CGST Act, 2017 to afford an opportunity of hearing under Section 75(4) cannot be done away with.
6. The mandate under section 75(4) of the CGST Act, 2017 is clear that, when a written request is made from the person chargeable with tax or penalty seeking for personal hearing, the same is required to be considered. Clearly there is violation of the mandate under section 75(4) of the Act and the submission of the learned counsel or the Revenue that the request for personal hearing was made out in the reply, which having been rejected, the request for personal hearing is also to be rejected is a hyper technical interpretation which has resulted in rejection of the opportunity under section 75(4) of the Act, which cannot be accepted. Accordingly, case is made out for setting aside the impugned order in the light of the violation of the non granting of opportunity of personal hearing under section 75(4) of the Act and the respondents are directed to afford an opportunity of personal hearing before proceeding with the order.”
22. The learned counsel also relied upon the Judgment in the case of Mahindra & Mahindra Limited and others vs. Union of India and others rendered by the High Court of Chhattisgarh, Bilaspur in W.A.No.172/2024, where the division bench held relying upon the Judgment in the case of Kalpraj Dharamashi and another (supra) that where the principles of natural justice has not been followed, the litigant would be entitled to invoke the jurisdiction of High Court under Article 226 of the Constitution of India. It has also dealt with the provisions of Section 75(4) and (5) at paragraph No.12, which reads as under :
“12. The submission of the State/Revenue is that as per Section 75 sub-Section 4 of the CGST Act, the date of hearing was already given on 11.10.2023 and 25.10.2023, therefore, the mandate of Section 75(4) stands complied. We are not in agreement to that submission as the opportunity of hearing when is contemplated under the statute, it has to be comprehensive and it cannot be short-circuited. The show case notice reflects that the date of reply was given on 30.102.023 and before the personal hearing date is given, it would be about a superfluous and would defeat the actual intent of the legislation of giving an opportunity of hearing. It is not expected that before the reply is filed, an assessee can be heard and thereafter the reply is filed. It is against the normal procedure and is against the normal practice of the parties that personal hearing is preponed and the reply is subsequently filed. This is not the intent of provisions of sub-Sections (4) and (5) of Section 75.”
23. It is also relevant to note that argument put forth by the learned counsel for the petitioner, who has relied upon the Judgment of the division bench of Allahabad High Court, in the case of M/s. Kronos Solutions India Private Limited vs. Union of India and Others, Writ Tax No.1417/2023, wherein it is held at paragraph No.7 as under:
“7. Undeniably, the appeal authority may either confirm or modify or annul the order under appeal. In face of statutory prescription allowing for only three above described options to the appeal authority, no inherent power may remain be exercised by the appeal authority to set aside the order under appeal and remand the proceedings to the original authority. Any doubt in that regard has been clarified by the legislature itself by stating that the appeal authority shall not refer the matter back to the adjudicating authority.”
It is by relying on this Judgment of division bench of Alahabad High Court, learned counsel for the petitioner contends that the provision of appeal provided under Section 107 of CGST Act, 2017 does not contemplate a remedy to remand the matter as it may either confirm, modify or annul the order under appeal. Therefore, vehement submission of learned counsel for the petitioner that an opportunity of hearing if provided, there would be an order of assessment passed on the reply and upon providing the personal hearing, which is not contemplated under the appeal remedy. Along with this Judgment several other judgments are relied by the learned counsel for petitioner in support of his case.
24. Whereas, learned AGA has also relied several Judgments in support of case of revenue. Primarily he contends that all the Judgments relied by the petitioner are on the pretext of non-providing of an opportunity and for violation of fundamental rights and violating of principles of natural justice. It is not the case made out according to the revenue for the reason that sufficient opportunity has been provided and non utilization of the said opportunity cannot be held to be against the revenue for the reason that the petitioner-taxpayers argument cannot be blindly accepted on the ground of violation of principals of natural justice or filing of reply or providing of an opportunity of hearing, non providing of opportunity of hearing, as an excuse to come before this Court to exercise discretionary jurisdiction under Article 226 of the Constitution of India.
25. Learned AAG appearing for respondent No.3-Revenue has relied on the Judgment in the case of Assistant Commissioner of State Tax vs. Commercial Steel Ltd., 2021 (52) G.S.T.L. 385 (S.C.), where the Hon’ble Apex Court after reciting the contentions of the parties refrained from interfering on the ground that there was statutory remedy of provision under Section 107 of the Act, 2017 provided and when there is alternative efficacious remedy though which is not a absolute bar to the maintainability of the writ petition. The writ petition should be entertained only in exceptional circumstances. It is relevant to note here the paragraph No.11, wherein the Hon’ble Apex Court has provided the relevant exceptional circumstances, which read as under :
“11. The respondent had a statutory remedy under Section 107. Instead of availing of the remedy, the respondent instituted a petition under Section 226. The existence of an alternate remedy is not an absolute bar to the maintainability of a writ petition under Article 226 of the Constitution. But a writ petition can be entertained in exceptional circumstances where there is :
(i) a breach of fundamental rights;
(ii) a violation of the principles of natural justice;
(iii) an excess of jurisdiction; or
(iv) a challenge to the vires of the statute or delegated legislation.”
26. He has also relied upon the Judgment in the case of State of Uttar Pradesh and Others vs. Kay Pan Fragrance Private Limited, reported in (2020) 5 SCC 811, wherein it is held that the taxpayer must take recourse to mechanism already provided for in the Act and the Rules so also in the case of State of Maharastra and Others vs. Greatship (India) Limited, reported in 2022 SCC OnLine SC 1262 after relying upon the several Judgments the Hon’ble Apex Court held that applying the law laid down by this Court in the aforesaid decision, the High Court has seriously erred in entertaining the writ petition under Article 226 of the Constitution of India against the assessment order, bypassing the statutory remedies.
27. The sum and substance of the entire arguments of the learned counsel for both sides is that when there is alternative efficacious remedy available, as according to the learned Additional Advocate General, the writ petition in normal circumstances should not be entertained and should be relegated to availing of a statutory remedy available under the statute, which is a creature of the statute and the rules, rather than invoking the writ jurisdiction under Article 226 of the Constitution of India. No doubt this is the correct proposition of law, but however, what requires to be seen is on the facts and circumstances of each case before arriving at conclusion as it is a well established rule of law that existence of alternative and efficacious remedy is not an absolute bar to the maintainability of the writ petition under Article 226 of the Constitution. However, the writ petition can be entertained only in exceptional circumstances as stated by the Hon’ble Apex Court in the case of the Assistant Commissioner of State tax and others V/s. M/s Commercial Steel Limited.
28. No doubt in the present case on hand, as contended by learned Additional Advocate General there is an appeal provision provided under Section 107 of the CGST Act. In the normal circumstance, the petitioner ought to have availed this remedy to challenge the order passed by the respondents/authorities. But, in the present case on hand, the petitioner has filed the reply and the same having not been considered, while passing the impugned order and an opportunity of personal hearing having not been provided, in my humble opinion would be a breach of the fundamental rights of the petitioner and also it would fall within the category of violation of principles of natural justice. As stated by me earlier, the CGST Act contemplates under Section 73(9) of the Act that the proper officer shall, after considering the representation, if any, made by person chargeable with tax, determine the amount of tax, interest or penalty equivalent to 10% of tax or Rs.10,000/-, whichever is higher due from such person, and issue an order.
29. Further, the next clause 10 reads that the proper officer shall issue the order under sub-Section 9 within three years from the due date for furnishing of annual return of financial year, to which tax not paid or short paid or input tax credit wrongly availed or utilized, relates to or within three years from the date of erroneous refund and subsequently, to top it all, Section 75(4) of the CGST Act, 2017 contemplates 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 any adverse decision is contemplated against such person.
30. Coming back to the case on hand, admittedly impugned order is passed which is adverse and against the petitioner/taxpayer, wherein he is ordered to pay tax, interest or penalty. The impugned order does not show or deal with the objections or response filed by the petitioner and admittedly no opportunity of hearing has been provided, though it is stated in the impugned order that even though opportunity has been provided, the same was not utilized by the tax payer. The impugned order is passed on 30.03.2024, whereas the letter of response is filed on 12.03.2024 and on 27.02.2024, though the petitioner has stated that he would positively file a reply by 01.03.2024, nevertheless the same is submitted on 12.03.2024 and in the said response he has also sought for a personal opportunity of being heard. The same is not forthcoming in the impugned order and admittedly, no opportunity of being heard is granted to the petitioner, which the revenue could have granted soon after the reply on the 12.03.2024, any date within a week from the response given on 12.03.2024. Thereby, even the revenue could have reasonable time to pass the order prior to 30.03.2024, which would be the cut off date for passing the order. Otherwise, it would be barred by time.
31. The judgments relied by the learned counsel for the petitioner of the co-ordinate bench of this Court would be squarely applicable to the present case on hand and under the circumstances, the impugned order of the Revenue is against the intent and object specified in the statute and hence is not sustainable. I do not find the revenue would be put at any kind of hardship, if opportunity of personal hearing is granted to the petitioner/tax payer, considering the response submitted by the petitioner on 12.03.2024.
32. Under the circumstances, the arguments put forth by learned counsel for the petitioner is appealing and has sufficient force with regard to the response not being considered by the revenue and opportunity of being heard not being provided in the impugned order and the same is to be sustained. Though the arguments put forth by learned Additional Advocate General is very appealing to the effect that despite sufficient opportunities being given for filing reply and response and non-utilization of opportunity of personal hearing provided, and there being alternative remedy, I am afraid the same cannot be accepted in the present facts and circumstances of the case, as the revenue could have accepted the response, adverted to it in the impugned order and provided an opportunity of hearing, which is a mandatory requirement as contemplated under Section 75(4) of the CGST Act and thereafter could have passed the suitable order either way, which has not been done in the present case.
33. Under the circumstances the petition deserves to be allowed. However, the same will have to be with caution and costs imposed on the petitioner for non utilization of the opportunities and non filing of the reply within time and as promised in the letter dated 27.02.2024, wherein the petitioner had said that he would file his reply on response by 1.03.2024, positively but did not file the same and also not utilized the opportunity of personal hearing provided by the revenue. Under the circumstances, I pass the following:
ORDER
i. The impugned order dated 30.03.2024 is hereby quashed.
ii. The matter is remitted back to the respondent No.3 Assistant Commissioner of Commercial Tax (Audit No.2) to take into consideration the response already filed by the petitioner/tax payer dated 12.3.2024 and consider the matter afresh after affording an opportunity of personal hearing, as stipulated under Section 75 (4) of the CGST Act and to proceed thereafter in accordance with law, subject to payment of costs of Rs.50,000/- (Rupees Fifty Thousand) to the respondent/Revenue on the next date of hearing i.e., 05.08.2024.
iii. In view of the fact that parties are represented by the respective counsel, the petitioner shall appear before the respondent No.3 on 05.08.2024, without awaiting any further notice from respondent No.3 in it’s office.
It is made clear that the petitioner cannot be permitted to take up the contention of there being any time bar in the present case on hand, as it is at the instance of the petitioner, the matter is remanded to provide him an opportunity and so also the revenue has passed the order well within time i.e. on 30.03.2024.
In view of disposal of the main petition the pending IAs if any do not survive for consideration.
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