Case Law Details
Kapton Alloys Private Limited Vs State of Gujarat & Anr. (Gujarat High Court)
The Gujarat High Court has set aside a GST demand order issued against Kapton Alloys Private Limited, citing a violation of the principles of natural justice. The court ruled that the adjudicating authority failed to provide a personal hearing, despite the taxpayer explicitly requesting one. The petition, filed under Articles 226 and 227 of the Constitution, challenged the order dated December 29, 2021, on the grounds that it was issued without considering the taxpayer’s submissions and supporting documents.
Kapton Alloys, engaged in the trading of iron and scrap material, had been issued a summons under Section 70 of the GST Act, to which it duly responded. A show cause notice under Section 74 was later issued, and the company submitted a detailed reply along with supporting documents. However, the adjudicating authority proceeded with the order without granting the requested personal hearing, leading to the challenge before the High Court. The petitioner relied on the Supreme Court’s ruling in Whirlpool Corporation v. Registrar of Trade Marks (1998) 8 SCC 1, which establishes that a writ petition is maintainable when there is a breach of natural justice, even if an alternative remedy exists.
The state, represented by the Assistant Government Pleader, argued that an opportunity for hearing had been provided, as recorded in the order. However, the court found a contradiction in the adjudicating authority’s observations. While the authority stated that the petitioner had not requested a hearing, the petitioner’s reply explicitly sought one. The court held that this procedural lapse amounted to a violation of Section 75(4) of the CGST Act, which mandates a personal hearing before adjudication if requested.
Citing the Supreme Court’s precedent in Whirlpool Corporation, the Gujarat High Court ruled that the order was invalid due to procedural lapses. The court quashed the demand order and remanded the matter to the adjudicating authority for fresh adjudication after granting the petitioner a personal hearing. The authority has been directed to complete the process within 12 weeks, ensuring adherence to due process and principles of natural justice.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
1. Heard learned advocate Mr. Varis Isani for the petitioner and learned Assistant Government Pleader Raj Tanna for the respondent.
2. By this petition under Articles 226 & 227 of the Constitution of India, the petitioner has prayed to quash and set aside the impugned order dated 29.12.2021 passed by the respondent – Adjudicating Authority on the ground of violation of principles of natural justice as no oral hearing in the matter was afforded to the petitioner.
3. The brief facts of the case are that the petitioner was doing trading business of all kinds of Iron and Scrap material. Summons under Section 70 of the Central / State Gujarat Goods and Service Tax Act, 2017 (for short ‘the CGST Act’), was issued on 18.06.2020. The petitioner filed reply in response to the summons on 24.06.2020. The petitioner filed further reply on 07.2020 providing the details and second reply on 08.08.2020. Thereafter, a show cause notice under Section 74 of the CGST Act was issued on 21.10.2020. The petitioner filed a detailed reply on 22.11.2021 in compliance of the show cause notice along with the documents and evidence. On 27.12.2021 orders of provisional attachment was passed under Section 83 of the CGST Act and thereafter the impugned order dated 29.12.2021 was passed in Form GST DRC-07.
4. Learned advocate Mr. Varis Ishani for the petitioner submitted that inspite of praying for the opportunity of personal hearing, the same was not provided by the respondent – Adjudicating Authority and impugned order was passed without taking into the consideration the documents filed by the petitioner along with the reply tendering the explanation.
5. It was further submitted by the learned advocate for the petitioner that the petitioner is aware about the alternative remedy available under Section 107 of the GST Act. However, the same is not an efficacious remedy in view of the fact that the respondent – Assessing Officer has not dealt with the submissions of the petitioner and no chance of proper hearing has been given to the petitioner which is in the breach of principles of natural justice. Learned advocate has relied upon the decision of the Hon’ble Apex Court in the case of “Whirlpool Corporation Registrar of Trade Marks, Mumbai and others reported in (1998) 8 SCC 1”, wherein it is held that there is no bar to writ jurisdiction if there is violation of principles of natural justice.
6. It was therefore submitted that the matter may be remanded back to the respondent – Adjudicating Authority to provide personal hearing to the petitioner and after hearing the petitioner, a fresh denovo order may be passed.
7. On the other hand, learned Assistant Government Pleader Mr. Raj Tanna for the respondent submitted that the opportunity of hearing was provided to the petitioner as recorded in the impugned He relied upon Para-3.7 of the impugned order to submit that though the petitioner was requested to produce all the evidence at the time of issuance of show cause notice, the same were not produced.
8. The respondent – Adjudicating Authority has observed in Para-3.7 of the impugned order, which reads as under :-
“3.7 KAPTON ALLOYS PRIVATE LIMITED GSTIN-
24AAECK8664P1ZT having registered office at SURVEY NO 181, KABODARA, TALOD, 383305 Gujarat, is hereby requested to produce at the time of showing cause, all the evidences upon which they intend to rely in support of their defense. They are further advised to indicate in their written explanation, as to whether they desire to be heard in person before the case is adjudicated. If no mention is made about this in their written explanation, it would be presumed that they do not desire to have personal hearing.”
9. The above observations however are in contradiction to Para-19 of the reply dated 22.11.2021 filed by the petitioner to the show cause notice, which reads as under :-
“19. We may be heard in person before the case is decided.”
10. Thus, it is evident that the respondent – Adjudicating Authority has failed to provide any opportunity of hearing to the petitioner though he has prayed in the written
11. In such circumstances, there is a breach of the principles of natural justice as held by the Hon’ble Apex Court in the case of ‘Whirlpool Corporation’ (supra).
12. In view of the foregoing reasons, we are of the opinion that the impugned order is required to be quashed and set aside only on the ground of violation of the principles of natural justice by not providing opportunity of hearing as contemplated in Section 75(4) of the CGST Act, more particularly, when the petitioner has prayed for such opportunity of hearing in the reply. The impugned order dated 29.12.2021 passed by the respondent – Adjudicating Authority is accordingly quashed and set aside and the matter is remanded back to the respondent – Adjudicating Authority to pass a fresh denovo order after giving opportunity of hearing to the petitioner and the petitioner is also permitted to raise all the contentions in accordance with law. Such exercise shall be completed within a period of Twelve weeks from the date of receipt of copy of this order.
13. The petition is accordingly disposed Notice is discharged.
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