HC Quashes Writ Petition as Natural Justice was Complied, Allows Statutory Appeal

Richards & John Wesley Engineers Pvt Ltd. Vs Principal Chief Commissioner of GST & C.EX (Madras High Court)

The recent judgment by the Madras High Court in the case of Richards & John Wesley Engineers Pvt Ltd. Vs Principal Chief Commissioner of GST & C.EX sheds light on the crucial aspect of adherence to natural justice principles in administrative proceedings. This article delves into the key arguments presented, the court’s analysis, and the implications of its decision.

The crux of the petitioner’s contention revolved around the alleged violation of natural justice principles due to the failure of the respondents to provide audit observations before finalizing the audit report. Additionally, concerns were raised regarding the adequacy of consideration given to the petitioner’s objections and supporting documents.

The court’s scrutiny of the case revealed that the petitioner had indeed been given opportunities to respond at various stages, including during the audit process and subsequent proceedings. While acknowledging procedural lapses such as the absence of document identification numbers on the audit report, the court found that the essence of natural justice had been upheld.

Furthermore, the judgment highlighted the petitioner’s right to avail of the statutory appellate remedy against the impugned order. Despite the petitioner’s plea for discretionary intervention, the court refrained from interfering, emphasizing the availability of the appellate route.

FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT

An assessment order dated 28.12.2023 is the subject of challenge in this writ petition. The petitioner is engaged in the wholesale trade and distribution of electrical goods. Pursuant to an audit, the audit report dated 09.12.2022 was issued. The petitioner raised objections in relation thereto. Thereafter, a show cause notice dated 11.09.2023 was issued to the petitioner. Such show cause notice was replied to on 17.10.2023. Pursuant to a personal hearing on 20.10.2023, the impugned order was issued on 28.12.2023.

2. Learned counsel for the petitioner contends that the impugned order is vitiated by the failure of the respondents to provide audit observations pursuant to the audit. As a consequence, he contends that the petitioner was deprived of the opportunity to respond to the audit observations before the audit report was prepared. He also submits that the audit report does not contain the document identification number. Learned counsel further contends that the reply of the petitioner and the documents annexed in support of such reply were not duly taken into consideration while confirming the demand with regard to non payment of GST on the sale of fixed assets and wrong availment of Input Tax Credit.

3. Mr. B. Ramanakumar, learned senior standing counsel, accepts notice for the respondents. He submits that the petitioner did not raise objections to the audit report and instead participated in proceedings culminating in the impugned order. At this point of time, he contends that it is not open to the petitioner to raise objection with regard to the audit, including in relation to the absence of the document identification number thereon. He further submits that the impugned order was issued on 28.12.2023 and that the petitioner failed to avail of the statutory remedy available against such order.

4. On perusal of the documents on record, it is evident that the petitioner was put on notice before the audit and submitted various documents in response to such notice. The petitioner also responded to the audit report and to the show cause notice. The impugned order discloses that a personal hearing was provided to the petitioner on 20.10.2023. In these circumstances, it is clear that principles of natural justice were complied with in substance. It is further evident from the impugned order that six issues were taken up for consideration. Out of the six issues, upon consideration of the petitioner’s reply, the tax proposal in respect of four issues were dropped. As regards the remaining issues, upon appraisal of evidence, the tax proposals were confirmed. As pointed out by learned senior standing counsel, the petitioner has an appellate remedy against this order.

5. In the facts and circumstances outlined above, I am not inclined to exercise discretionary jurisdiction. However, it should be noticed that this writ petition was filed on 29.02.2024, which was within the original period of limitation. As of today, the petitioner is within the condonable period. Therefore, it is just and appropriate that the petitioner be permitted to present the statutory appeal.

6. Therefore, W.P.No.9001 of 2024 is disposed of by permitting the petitioner to present a statutory appeal before the appellate authority. If such appeal is presented within ten days from the date of receipt of a copy of this order, the appellate authority is directed to receive and dispose of the same on merits without going into the question of limitation. No costs.