Case Law Details
Jayanta Ghosh and Ors. Vs State of West Bengal and Ors. (Calcutta High Court)
Introduction: In a landmark ruling, the Calcutta High Court has underscored the importance of granting a personal hearing (PH) at the adjudication stage in tax disputes, specifically within the context of the Goods and Services Tax (GST) proceedings. The case of Jayanta Ghosh and Ors. Vs State of West Bengal and Ors. delves into the procedural nuances and the adherence to the principles of natural justice in the context of GST appeals. This article aims to dissect the judgment, focusing on the criteria for granting a personal hearing, the implications of its denial, and the subsequent directions issued by the court.
Detailed Analysis: The case in question highlights a significant procedural lapse by the authorities involved in the GST adjudication process. The petitioner, Jayanta Ghosh, challenged the order passed without a personal hearing, deeming it a violation of the principles enshrined under Section 107(8) of the Central Goods and Services Tax Act, 2017, and the West Bengal Goods and Services Tax Act, 2017. The appellate authority’s dismissal of the appeal on the grounds of delay further compounded the issue, without considering the failure to issue a notice of hearing.
The judgment brings to light several pivotal aspects:
1. Mandatory Provision for Personal Hearing: Drawing upon previous rulings, the Calcutta High Court reiterated that the GST Act mandates the provision of a personal hearing in cases where an adverse decision is contemplated. This provision aims to safeguard the taxpayer’s rights and ensure a fair assessment.
2. Violation of Natural Justice: The court observed that denying a personal hearing, especially when the adjudication could result in adverse outcomes for the taxpayer, constitutes a breach of the principles of natural justice. Such principles are fundamental to ensuring that the process is transparent, fair, and equitable.
3. Condonation of Delay and Appeals on Merits: Significantly, the court recognized that delays in filing appeals could be condoned if they stem from a violation of procedural rights, such as the right to a personal hearing. This approach underscores the court’s commitment to justice and the rectification of procedural discrepancies.
4. Stay on Recovery Proceedings: Recognizing the potential financial strain on the petitioner, the court granted a stay on recovery proceedings pending the disposal of the appeal. This decision reflects the judiciary’s understanding of the economic implications of such disputes on individuals and businesses.
Conclusion: The Calcutta High Court’s decision in Jayanta Ghosh and Ors. Vs State of West Bengal and Ors. is a testament to the judiciary’s role in upholding the principles of natural justice within the realm of tax adjudication. By emphasizing the necessity of a personal hearing and the possibility of condoning delays due to procedural violations, the court has reinforced the legal safeguards available to taxpayers. This ruling not only sets a precedent for future cases but also sends a clear message about the importance of procedural fairness and the rights of individuals in the face of administrative decisions. As the GST regime continues to evolve, this judgment will undoubtedly serve as a crucial reference point for ensuring that the principles of natural justice are integral to the tax adjudication process.
FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT
The petitioner has challenged the impugned order dated 17.01.2024 passed by respondent no.3 on the ground that he has not been afforded an opportunity of hearing as per Section 107(8) under the Central Goods and Services Tax, 2017and the West Bengal Goods and Services Tax, 2017. The petitioner has also challenged the order dated 11.08.2023 passed under Section 74 of the GST Act raising a demand on the petitioner for an amount of Rs.40,73,996.84 for the period April 2022 to March 2023 in violation of provision of Section 74 of the GST Act.
Learned counsel for the petitioner pointed out that show cause notice itself reflects that personal hearing should have been given to the petitioner in person or through his authorized representative but the same was not adhered to. It is the case of the petitioner that the show cause notice itself reflects that the date of personal hearing, time of personal hearing and the venue of personal hearing has been left blank which itself is in violation of the principles of natural justice. Further, it is the contention of the petitioner that in pursuance to the show cause notice, an order was passed on 11.08.2023 under Section 74 of the GST Act in total violation of the principles of natural justice by not affording any opportunity of personal hearing to the petitioner. The petitioner challenged the same before the appellate authority under Section 107 of the GST Act. The appellate authority vide order dated 17.01.2024 dismissed the appeal of the petitioner on the ground of limitation.
The petitioner relied upon the judgment passed by the Hon’ble Division Bench of Calcutta High Court in MAT No. 205 of 2023 titled as Goutam Bhowmik v. State of West Bengal decided on 9th January, 2024wherein it has been held that under Section 75(4) it is mandatory to grant personal hearing. Section 75(4) of the Central Goods and Services Tax, 2017 is quoted hereunder:-
“(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”.
From the perusal of Section 75(4) of the Act, it is evident that opportunity of hearing is to be granted by authorities under the Act wherein request is received from the person chargeable with tax or penalty or opportunity of hearing where any adverse decision is contemplated against such person. Thus, where an adverse decision is contemplated against a person, such a person even need not to request for opportunity of personal hearing and it is mandatory for the authority concerned to afford opportunity of personal hearing before passing an order adverse of such person, as has been held in MAT No. 205 of 2023.
Learned counsel for the petitioner further relies upon anotherjudgment dated 18.10.2023 passed by the Hon’ble Division Bench of Calcutta High Court in MAT 1361 of 2023 titled as Murtaza B Kaukawala v. State of West Bengal to substantiate that delay can be condoned if the principles of natural justice has been violated by not providing opportunity of hearing to the petitioner.
Learned counsel for the respondent fairly states that the delay can be condoned if the appeal is time barred. He relied upon the decision of this Court in MAT 81 of 2022 titled as S.K. Chakraborty & Sons v. Union of India & Ors. wherein the Court has held as under:-
“Therefore, in our view, since provisions of Section 5 of the Act of 1963 have not been expressly or impliedly excluded by Section 107 of the Act of 2017 by virtue of Section 29(2) of the Act of 1963, Section 5 of the Act of 1963 stands attracted. The prescribed period of 30 days from the date of communication of the adjudication order and the discretionary period of 30 days thereafter, aggregating to 60 days is not final and that, in given facts and circumstances of a case, the period for filing the appeal can be extended by the Appellate Authority”.
Applying the principle of the above mentioned authorities, this Court finds that the appellate authority has violated the principle of natural justice by not affording an opportunity of hearing to the petitioner. The delay in filing of the appeal is condoned and the present writ petition is allowed by setting aside the impugned order dated 17.01.2024.
It is hereby directed that the appellate authority shall give personal hearing to the petitioner and his appeal shall be decided on merits.
As the petitioner deposited pre-deposit amount 10% of the disputed tax amount, there shall be a stay of the recovery proceedings till disposal of the appeal case.
With the aforesaid direction, the present writ petition is disposed off.
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