Case Law Details
Cowtown Software Design Pvt. Ltd. Vs Union of India (Bombay High Court)
The case of Cowtown Software Design Pvt. Ltd. vs. Union of India before the Bombay High Court revolves around the quashing of an Assessment Order dated August 18, 2023. The petitioner contested the order, alleging a breach of natural justice and denial of a fair personal hearing.
The petitioner, Cowtown Software Design Pvt. Ltd., challenged the Assessment Order issued by Respondent No.3, citing violations of Section 75(4) of the CGST Act and principles of natural justice. Despite seeking a personal hearing, the petitioner received no opportunity to present their case adequately.
The court examined Section 75(4) of the CGST Act, which mandates a personal hearing upon written request or when an adverse decision is contemplated. The petitioner’s request for a hearing was ignored, leading to a decision contrary to procedural fairness.
Drawing on precedent cases and legal principles, the court concluded that the Assessment Order lacked procedural fairness and violated statutory provisions. Consequently, the court quashed the order and directed Respondent No.3 to provide a fair opportunity for a personal hearing and issue a new order within a specified timeframe.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. Rule made returnable forthwith.
2. Heard finally by consent of the parties.
3. By this Writ Petition, filed under Article 226 of the Constitution of India, the Petitioners seek quashing of an Order dated 18th August 2023 passed by Respondent Nos.3 on the ground that the same is contrary to the provisions of Section 75(4) of the Central Goods and Service Tax Act, 2017 (“ CGST Act”) and is in violation of the principles of natural justice.
4. Petitioner No.1 is a private company registered under the CGST Act and under the Maharashtra Goods and Service Tax Act 2017 (“MGST Act”). For the purpose of effecting taxable output supplies, Petitioner No.1 availed Input Tax Credit (ITC) on the goods and services supplied by it.
5. An assessment was conducted on the returns of the Petitioner, and after scrutiny of the return for F.Y. 2017-18, an intimation in Form GST ASMT-10, dated 14th February 2023, was issued to Petitioner No.1 by Respondent No.3 calling upon it to explain certain discrepancies noted in the returns filed by it. The discrepancies alleged were to the effect that there was a difference between the ITC claimed by Petitioner No.1 in Form GSTR 3B as opposed to the ITC confirmed in Form GSTR 2A.
6. By Form GST ASMT-11 dated 21st March 2023, Petitioner No.1 filed its submissions against Form ASMT-10 dated 14th February 2023. Petitioner No.1 disagreed with the discrepancies alleged by Respondent No.3 and provided its explanation in respect of the same. By the aforesaid submission, Petitioner No.1 requested Respondent No.3 to grant a personal hearing.
7. However, without granting any personal hearing or seeking any further clarification, Form GST DRC 01A dated 6th April 2023 was issued by Respondent No.3 to Petitioner No.1 intimating the tax ascertained as being payable for the period 2017-18. By a letter dated 8th May 2023, Petitioner 1 submitted its reply.
8. Thereafter, Petitioner No.1 received a Show Cause Notice under Section 73 of the CGST / MGST Act, 2017, along with a summary of the demands raised therein, in Form DRC-01 dated 1st June 2023, directing Petitioner No.1 to show cause as to why tax amount of Rs.2,71,30,468/-, along with applicable interest and penalty, should not be recovered from Petitioner No.1 on the ground that excess ITC had been availed by Petitioner No.1 on the basis of difference in ITC between GSTR 3B and GSTR 2A returns. Along with the said notice there was an additional document annexed containing all particulars as in DRC 01. Additionally, the said document contained the date and time of personal hearing, which skipped the attention of the Petitioner as it felt that the said additional document was nothing but a repetition of DRC 01 A.
9. In response to the said Show Cause Notice, Petitioner No.1 made detailed submission by its reply dated 4th July 2023 in Form DRC-06 denying the allegations made in the Show Cause Notice and specifically seeking an opportunity of personal hearing to explain its view point and position qua the allegations levelled in the Show Cause Notice. While filing the aforesaid Form DRC-06, the automatic dialogue box in respect of “option of personal hearing” was marked “NO”. It is the case of Petitioner that it skipped the mind of the Petitioner to mark it “YES”. Nevertheless, Petitioner No.1, in clear terms, had sought for a personal hearing in its detailed reply to the Show Cause Notice.
10. However, despite the same, Respondent No.3, without granting a personal hearing, issued the impugned Order dated 18th August 2023 wherein, out of the total GST demand of Rs.2,71,30,467/- proposed in the Show Cause Notice for FY 2017-18, he confirmed the demand to the extent of 2,13,10,721 /-, along with applicable interest and penalty.
11.It is the case of Petitioners that the said Order dated 18th August 2023 has been passed by Respondent No.3 in violation of the provisions of Section 75(4) of the CGST / MSGST Act and in violation of the principles of natural justice as no personal hearing was given to Petitioner No.1 before passing the said Order despite Petitioner No.1 having specifically sought a personal hearing by its reply dated 4th July 2023. Further, it is the submission of the Petitioners that, even otherwise, even if Petitioner No.1 had not sought a personal hearing, Respondent No.3 was required to give such a personal hearing to Petitioner No.1 as Section 75(4) of the CGST / MGST Act mandated such a personal hearing where any adverse decision is contemplated against a person.
12. On the other hand, the Respondents contend that no personal hearing was required to be given to Petitioner No.1 as it had not marked “YES” in the dialogue box “Option of personal hearing”. Further, it is the case of the Respondents that no such personal hearing was even otherwise required to be given as Petitioner No.1 had filed a detailed reply denying the allegations made in the Show Cause Notice and the contentions raised by Petitioner No.1 in the said reply had been dealt with by the said Order dated 18th August 2023.
13. We have heard the learned counsel for the parties and have perused the documents on record. Section 75(4) of the CGST / MGST Act reads as under:
“(4) 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.”
14. From a plain reading of Section 75(4), it is absolutely clear that, where a request is received in writing from a person chargeable with tax or penalty for a personal hearing, then an opportunity of personal hearing has to be given to that person. Further, as per the provisions of Section 75(4), even in a case where the person chargeable with tax or penalty has not requested for a personal hearing, the Department is bound to give a personal hearing when an adverse decision is contemplated against such a person.
15. In the present case, by its reply dated 4th July 2023, Petitioner No.1 specifically sought an opportunity of personal hearing. In these circumstances, Respondent No.3 was bound to give a personal hearing to the Petitioner before passing the said Order dated 18th August 2023. Further, by the said Order dated 18th August 2023, a decision adverse to Petitioner No.1 has been taken. Therefore, in these circumstances also, Respondent No.3 was bound to given a personal hearing to Petitioner No.1. However, no such personal hearing has been given by Respondent No.3 to Petitioner No.1 before passing the said Order dated 18th August 2023.
16. In these circumstances, in the present case, since the said Order dated 18th August 2023 has been passed without giving any personal hearing to the Petitioner, the same is in violation of the principles of natural justice and ex-facie contrary to the provisions of Section 75(4) of the CGST / MGST Act.
17. We are supported in this view by the decisions of the Division Bench of this Court in Kuehne Nagel Private Limited Vs. The State of Maharashtra & Ors. (Writ Petition No. 15210 of 2023), Hydro Pneumatic Accessories India Pvt. Ltd. Vs. The Assistant Commissioner of State Tax, Muland West & Anr. (Writ Petition (L) No. 33343 of 2023), of which one of us (Justice G. S. Kulkarni) was a member and Mauli Sai Developers Private Limited vs. Union of India and Ors. (Writ Petition (L) No.38399 of 2022) passed by this Division Bench.
18. In the light of the aforesaid discussion, we dispose of this Writ Petition by the following Orders:
a. The impugned Order dated 18th August 2023 passed by Respondent No.3 is hereby quashed and set aside.
b. Respondent No.3 shall give an opportunity of personal hearing to the Petitioner No.1, and, after considering all the contentions of Petitioner No.1, pass an appropriate order in accordance with law, within a period of four weeks from the date on which a personal hearing is given to Petitioner No.1.
c. Rule is made absolute in the aforesaid terms.
d. In the facts and circumstances of the present case, there will be no Order as to costs.
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