Case Law Details
Patanjali Ayurved Limited Vs State of Madhya Pradesh (Madhya Pradesh High Court)
In a recent ruling by the Madhya Pradesh High Court, in the case of Patanjali Ayurved Limited Vs State of Madhya Pradesh, the court declared the GST DRC-07 order for excess Input Tax Credit (ITC) void due to the denial of a fair hearing to the assessee. This case highlights the importance of adhering to principles of natural justice in tax adjudication processes.
Background: The petitioner, Patanjali Ayurved Limited, challenged the adjudication order in form GST DRC-07 issued by the Deputy Commissioner of State Tax, Division – I, Indore. The order, dated July 15, 2022, demanded repayment of excess Input Tax Credit amounting to Rs. 78,49,607/- along with interest and penalty under relevant sections of the CGST Act, MPGST Act, and IGST Act. The petitioner contended that the order was passed without considering their submissions and without providing an opportunity for a hearing, violating principles of natural justice.
Legal Analysis: The petitioner argued that Section 74(9) of the CGST Act/MPGST Act mandates the proper officer to consider representations made by the assessee before passing an order under Section 74. However, in this case, the representation submitted by the petitioner was not considered before issuing the impugned order.
Furthermore, Section 75(4) of the CGST Act/MPGST Act requires granting an opportunity of hearing to the assessee before passing any adverse order. The petitioner emphasized that the absence of a personal hearing in their case violated this statutory provision and principles of natural justice.
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