Case Law Details
Menacherry Lonappan Jayan Vs State Tax Officer (Kerala High Court)
Introduction: In a significant ruling, the Kerala High Court addressed the appeal of Menacherry Lonappan Jayan against the State Tax Officer’s order (Ext.P5), which proposed a GST demand without affording proper opportunity of hearing. The appellant contested the violation of natural justice, leading to the dismissal of the writ petition by the learned Single Judge and subsequent appellate challenge.
Detailed Analysis: Menacherry Lonappan Jayan, an assessee under the GST Act, had complied with filing returns and paying taxes for the assessment year 2017-18. The controversy arose when the State Tax Officer, through Ext.P1, proposed a substantial demand for tax and interest based on alleged non-payment of tax and excess input tax credit. In response to Ext.P1, the appellant submitted a reply.
Despite the appellant’s submission of a reply (Ext.P3) through the registered web portal, explicitly requesting an opportunity for a personal hearing, the State Tax Officer issued Ext.P5, a show-cause notice finalizing the demand under Section 73. The crux of the matter lies in the fact that Ext.P5 did not reference the appellant’s reply (Ext.P3) or grant the requested opportunity for a personal hearing. This procedural lapse led to a violation of the principles of natural justice.
The Kerala High Court, upon hearing the arguments from both sides, concluded that Ext.P5 cannot be sustained and is liable to be set aside. The court emphasized the importance of adhering to principles of natural justice in administrative proceedings, especially in matters of tax demands. The appeal was allowed, setting aside both the impugned judgment and Ext.P5.
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