GST Order in Violation of Natural Justice: Madras HC Orders Reconsideration

Tvl. Agam Shri Coco Products Vs Office of the Assistant Commissioner (ST) (Madras High Court)

In the case of Tvl. Agam Shri Coco Products vs. Office of the Assistant Commissioner (ST), the Madras High Court addressed a writ petition challenging an order dated April 18, 2023, related to the assessment year 2018-19. The petitioner contended that the order was issued without a personal hearing and incorrectly applied Section 74 of the GST Act, which is not suitable for genuine errors or inadvertent omissions. The Court found that the order violated principles of natural justice due to the lack of a hearing opportunity. As a result, the Court set aside the impugned order and remanded the case for fresh consideration. The petitioner is required to pay 15% of the penalty amount (Rs. 18,922) within two weeks to proceed with the review. The attachment on the petitioner’s bank account is lifted, and the respondent is directed to release it. The petitioner must file their reply and documents within two weeks after the payment, and the respondent is to review the case, providing an opportunity for a personal hearing. Also Read: HC quashed GST order for violation of principles of natural justice and Principles of Natural Justice & Adjudicating Authority Under GST

FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT

This writ petition has been filed challenging the impugned proceedings dated 18.04.2023 on the file of the 1^st respondent for the Assessment year 2018-19.

2. Mr.V.Prashanth Kiran, learned Government Advocate, takes notice on behalf of the 1^st respondent. By consent of the parties, the main writ petition is taken up for disposal at the admission stage itself.

3. In a connected matter (W.P.No.19271 of 2024), which is pertaining to the assessment year 2017-18, this Court had already passed an order dated 31.07.2024, whereby the impugned order passed by the respondent was set aside, subject to the payment of 15% of the disputed tax demand.

4. In the present case, which is pertaining to the assessment year 2018-19, the learned counsel for the petitioner would submit that they had already paid the entire tax amount and only the penalty is not yet paid by them. Further, she would submit that the aforesaid order passed by this Court in the connected matter will be squarely applicable to the present case also. Hence, she requests this Court to pass a similar order in this petition.

5. Further, she would submit that in the present case, the impugned order was passed by wrongly invoking Section 74 of the Goods and Services Act, 2017 (hereinafter called as “the GST Act”) since provisions of the said Section will not apply for any genuine errors,  inadvertent omissions or systematic issues and the petitioner was unable to explain the said aspect, due to the non-providing of any opportunity of personal hearing to the petitioner prior to the passing of impugned order. Hence, she requests this Court to set aside the impugned order on this aspect also.

6. In reply, the learned Government Advocate for the ₁st respondent would submit that in the aforesaid connected matter, the tax was not paid by the petitioner therein, whereas, in the present matter, the tax was already collected and the penalty is not yet paid by the petitioner. Therefore, he requested this Court to remit the matter back to the 1st respondent, subject to the payment of 15% of the penalty amount by the

7. Heard the learned counsel for the petitioner and the learned Government Advocate for the 1^st respondent and also perused the materials available on record.

8. In the present case, it appears that no opportunity of personal hearing was provided to the petitioner prior to the passing of impugned order. Hence, this Court is of the view that the impugned order was passed in violation of principles of natural justice. In such view of the matter, this Court is inclined to set aside the impugned order dated 18.04.2023 passed by the 1^st respondent. Accordingly, this Court passes the following order:-

(i) The impugned order dated 18.04.2023 is set aside and the matter is remanded to the 1^st respondent for fresh consideration on condition that the petitioner shall pay a sum of Rs. 18,922/- (15% of penalty) to the 1st respondent within a period of two weeks from today (06.08.2024) and the setting aside of the impugned orders will take effect from the date of payment of the said amount.

(ii) The petitioner shall file their reply/objection along with the required documents, if any, within a period of two weeks thereafter.

(iii) On filing of such reply/objection by the petitioner, the respondent shall consider the same and pass appropriate orders on merits and in accordance with law, after providing an opportunity of personal hearing to the petitioner, as expeditiously as possible.

(iv) Considering the fact that the impugned order itself has been quashed, this Court is of the opinion that the attachment made on the bank account of the petitioner cannot survive any longer and hence, it is lifted. As a sequel, the 1^st respondent is directed to release the attachment on the bank account of the petitioner held with the 2^nd respondent, within a period of two weeks from the date of receipt of a copy of this order.

9. With the above directions, this writ petition is disposed of. No costs. Consequently, the connected miscellaneous petitions are also closed