Karnataka HC sets aside GST order citing lack of fair hearing under KGST Act

Bangalore Golf Club Vs Commercial Tax Officer (Karnataka High Court)

petitioner was not granted an opportunity as contemplated under Section 75(4) of the KGST Act- orders set aside to provide fair hearing under KGST Act

In Bangalore Golf Club Vs Commercial Tax Officer, the Karnataka High Court set aside a GST order issued under Section 73(9) of the CGST/KGST Act for the financial years 2017-18 and 2018-19. The petitioner, Bangalore Golf Club, challenged the order dated 29.12.2023, arguing that they were not granted an opportunity for a fair hearing as required under Section 75(4) of the KGST Act. The petitioner also contested the legality of clubbing two financial years into a single order. The court found that the absence of a hearing constituted a breach of procedural fairness and remanded the case to the Commercial Tax Officer for fresh consideration. The court clarified that setting aside the order did not address the petitioner’s contention regarding the clubbing of financial years, and all issues remain open for reconsideration. The petitioner is required to appear before the respondent on 22.06.2024 without further notice, and the question of limitation will not be raised due to the remand. The petition was disposed of, and all contentions were preserved for future proceedings.

FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT

The petitioner has called in questioned the liability of the petitioner as per order dated 29.12.2023 passed under Section 73(9) of the Central Goods and Services Tax / Karnataka Goods and Services Tax Act, 2017 (for short ¹CGST/KGST Act¹) by respondent No.1 for the tax periods of 2017-18 and 2018-19. The petitioner has also sought for setting aside of the notification dated 13.07.2022 at Annexure-¹N¹ as well as notification dated 06.04.2023 at Annexure-¹P¹.

2. Learned counsel Sri. Shankare Gowda M.N., appearing for the petitioner submits that the order at Annexure-¹H¹ has been passed under Section 73(9) of the CGST / KGST Act, 2017 with respect to the financial years 2017-18 and 2018-19. It is submitted that such clubbing of financial years and passing common order is impermissible.

3. It is further submitted that without prejudice to the above contention, the impugned order is required to be set aside as the petitioner has not been granted any opportunity including the one as contemplated under Section 75(4) of the KGST Act before adverse orders are passed against him.

4. After hearing the matter for sometime, while noticing that a common order is passed with respect to the financial years 2017-18 and 2018-19, taking note of the contention that the petitioner was not granted an opportunity as contemplated under Section 75(4) of the KGST Act when the order passed seems to be adverse to the interest of the petitioner, it would meet the ends of justice by setting aside the order on the ground that the petitioner is afforded an opportunity of hearing and to remit the matter back for fresh consideration before respondent No.1.

5. It is made clear that setting aside of the impugned order is not to be taken as recording a finding as regards the contention of the petitioner regarding passing common order for two different financial years. However, in light of the plea that no sufficient opportunity being given as referred to above, the order is required to be set aside.

6. Accordingly, the order at Annexure-‘H’ is set aside and the matter is remitted to respondent No.1 to reconsider the matter afresh, after affording an opportunity as mentioned under Section 75(4) of the KGST Act and to proceed in accordance with law. The question of entering into correctness of Annexures-‘N’ and ‘P’ does not arise in light of substantive relief being afforded by setting aside the order at Annexure-‘H’.

7. In light of remand of the matter, petitioner ought not to take up any contention on the ground of limitation. Petitioner to appear before respondent No.1 without further notice on 22.06.2024.

8. A.No.1/2024 for dispensation is allowed. Petitioner is dispensed with production of certified copy of Annexures-N and P taking note that in the present case, there is no adjudication as regards the said notifications.

Accordingly, petition is disposed off. All contentions are kept open.