Case Law Details
Phuljhora Agro Plantation Private Limited & Anr. Vs Union of India & Ors. (Calcutta High Court)
The Calcutta High Court has quashed a GST assessment order issued against Phuljhora Agro Plantation Pvt. Ltd. under Section 73(9) of the West Bengal Goods and Services Tax Act, 2017. The petitioner was initially served with a show cause notice on August 8, 2023, which failed to specify the date, time, or venue for a personal hearing, despite suggesting that a hearing might be provided. The petitioner did not respond, and an assessment order confirming a tax demand of Rs. 18,54,576 was issued on November 17, 2023. The petitioner challenged the order, arguing that the lack of a specified hearing violated the principles of natural justice. The court agreed, referencing a similar case (Goutam Bhowmik v. State of West Bengal), which mandates that the proper officer must afford an opportunity for a hearing when an adverse decision is contemplated. Consequently, the court set aside the show cause notice and the assessment order, allowing the authority to initiate fresh proceedings with a proper hearing. The limitation period for such proceedings will begin from the date of the new notice.
FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT
A show cause notice dated August 08, 2023, under Section 73 of the West Bengal Goods and Services Act, 2017, was issued to the petitioner, seeking a response within thirty days from the date of the notice. The petitioner failed to respond. Although this notice indicated that an opportunity for a hearing might be provided, it failed to specify any date, time, or venue for the hearing. The petitioner again did not respond. As a result, an assessment order under Section 73(9) of the Act was issued on November 17, 2023, confirming a demand of Rs. 18,54,576/ -.
Challenging these proceedings, the petitioner has filed this writ petition before this Court. The petitioner contends that he was not afforded a proper opportunity for a hearing by the authority and relies on the judgment reported at (2024) SCC OnLine Cal 372 (Goutam Bhowmik v. State of West Bengal).
The learned advocate for the Revenue argues that the petitioner had the option to seek clarification regarding the date and place of the hearing but chose not to participate. Therefore, the petitioner’s claim of a violation of the principles of natural justice is not sustainable.
A perusal of the show cause notice dated August 8, 2023, clearly indicates that the authority marked ‘not applicable’ in the columns for the date, time, and venue of the personal hearing. This suggests that the authority was not inclined to provide a personal hearing to the petitioner, leading to the assessment order dated November 17, 2023. The learned advocate for the petitioner has appropriately relied on the judgment in Goutam Bhowmik’s case. The relevant part of the judgment is quoted below:
“11. Considering the facts and circumstances of the present case, the provisions of Section 73 read with Section 75(4) of the WBGST/CGST Act, 2017, we are of the view that proper officer is bound to afford an opportunity of hearing where either a request in writing is received by him from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person. To afford opportunity of hearing is a statutory mandate which cannot be violated by proper officer and in the event of violation the order passed by the proper officer cannot be sustained. Under the circumstances, the impugned order dated 25.03.2021 passed by the proper officer for the period April 2018 to March 2019 cannot be sustained and deserves to be quashed and the matter deserves to be remanded to the concerned Authority to pass an order afresh in accordance with law after affording reasonable opportunity of hearing to the petitioner/appellant.”
In my view, the petitioner’s case is covered by this decision.
If the initial action is bad, subsequent proceedings based on such action cannot be sustained. [See: (2011) 5 SCC 142 (Chairman-Cum-Managing Director, Coal India Limited v. Ananta Saha)].
The assessment was based on a show cause notice denying the petitioner the right to a personal hearing. Consequently, the proceedings based on the defective show cause notice must go.
Therefore, the show cause notices dated August 8, 2023, the assessment order dated November 17, 2023, are set aside. The authority is permitted to initiate a fresh proceeding under Section 73 of the Act of 2017, giving an opportunity of hearing to the petitioner. Should a new proceeding be initiated, the limitation under Section 73(10) of the Act should commence from the date of the new notice.
Accordingly, WPA 1740 of 2024 is disposed of.
Urgent photostat certified copy of this order, if applied for, be supplied to the learned advocates for the parties on usual undertakings.
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