Case Law Details
Alfa Cityinfra Private Limited Vs Chief Commissioner of CT and GST, Odisha, Cuttack and others (Orissa High Court)
Summary: In the case Alfa Cityinfra Private Limited v. Chief Commissioner of CT and GST, Odisha [W.P. No. 16864 of 2024, dated July 23, 2024], the Orissa High Court addressed a petition filed by Alfa Cityinfra Private Ltd. against a demand notice issued under Section 73 of the Odisha Goods and Services Tax Act, 2017. The demand notice, dated July 27, 2021, related to the financial year 2018-19 and directed the petitioner to file a reply and attend a personal hearing. However, the notice did not specify a date for the personal hearing, and the petitioner cited pandemic-related delays as the reason for not submitting a timely response. The main issue was whether the omission of the personal hearing date violated the principles of natural justice.
The court held that a defective Show Cause Notice (SCN), especially one omitting essential details like a personal hearing date, violates natural justice principles. The court quashed the demand notice and allowed the petitioner two weeks to file a reply, with the assurance of a personal hearing if requested. The case underscores the importance of ensuring that procedural requirements, including the opportunity for a hearing, are followed when issuing notices under GST laws.
This decision aligns with previous judgments from courts such as the Allahabad High Court in Mohan Agencies v. State of U.P. and the Madras High Court in Haarine Associates v. Assistant Commissioner, where personal hearings were deemed necessary to uphold natural justice. Such rulings reinforce the importance of proper adherence to statutory provisions to ensure fair treatment of taxpayers in GST-related disputes.
The Hon’ble Orissa High Court in the case of Alfa Cityinfra (P.) Ltd. v. Chief Commissioner of CT and GST, Odisha [Writ Petition (Civil) No. 16864 of 2024 dated July 23, 2024], held that any defect in the Show Cause Notice (“SCN”) would cause violation of principles of natural justice. Hence, the demand was to be set aside and time was to be extended for Assessee to file reply and thereafter in event personal hearing was sought, it would be given.
Facts:
M/s. Alfa Cityinfra Private Ltd. (“the Petitioner”), challenged a demand notice issued under Section 73 of the Odisha Goods and Services Tax Act, 2017 (“the OGST Act”) dated July 27, 2021 (“the Impugned Notice”), issued by the Sales Tax Officer pertaining to Financial Year 2018-19.
The Impugned Notice directed the Petitioner to file a reply as well as for personal hearing on dates and times mentioned. However, the table in the Impugned Notice did not specify a date for the personal hearing. Additionally, the Petitioner cited the pandemic as a reason for not submitting a timely reply to the SCN.
Hence, aggrieved by the Impugned Notice, the Petitioner filed the present writ petition.
Issue:
Whether the omission of a personal hearing date in the SCN violates the principle of natural justice?
Held:
The Hon’ble Orissa High Court in Writ Petition No. 16864 of 2024 held as under:
- Opined that, the Petitioner was relying on directions given in the Impugned Notice. It was in respect of a demand. Any defect in the SCN is violation of principles of natural justice.
- Held that, the Court deemed the Impugned SCN invalid and therefore, quashed it. Furthermore, the Court granted the Petitioner a two-week period to file a response and assured that a personal hearing would be provided. Consequently, the writ petition was allowed.
Our Comments:
Section 75 of the Central Goods and Service Tax Act, 2017 (“the CGST Act”) discusses the “General Provisions relating to determination of tax”. Further, Section 75(4) of the CGST Act specifically states that an opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person.
In the Pari Materia case of the Hon’ble Allahabad High Court in M/s Mohan Agencies v. State of U.P. and Another [Writ Tax No. 58 of 2023, dated December 13, 2023], wherein the Court held that providing the opportunity of personal hearing would ensure observance of rule of natural justice and allow the Respondent to pass appropriate and reasoned orders in order to serve the interest of justice and allow a better appreciation to arise at the appeal stage. Remitted the matter back to the Revenue Department.
Similar was the issue before the Hon’ble Madras High Court in Haarine Associates v. Assistant Commissioner (ST)(FAC) [Writ Petition No.15691 of 2024 and W.M.P. Nos.17100 to 17102 of 2024 dated June 24, 2024], set aside an assessment order because the order was issued without providing an opportunity to address the discrepancies. Consequently, the court agreed with the Assessee to remit 10% of the disputed tax demand within two weeks and allowed the submission of reply to SCN.
FULL TEXT OF THE JUDGMENT/ORDER OF ORISSA HIGH COURT
Ms. Mohanty led by Mr. Mohanty, learned advocates appear on behalf of petitioner. Ms. Mohanty submits, under challenge is demand notice dated 27th July, 2021 issued by the Sales Tax Officer pertaining to financial year 2018-19 issued under section 73 of Odisha Goods and Services Tax Act, 2017. She draws attention to show cause notice dated 27th July, 2021 to point out, in it there was direction to file reply as well as for personal hearing on dates and times mentioned in the table. Referring to the table she demonstrates, only date of filing show cause was given. Date for personal hearing was not given. It amounted to violation of principles of natural justice. On query made she submits, reply to the show cause could not be submitted because of the pandemic.
2. Mishra, learned advocate, Standing Counsel appears on behalf of revenue and submits, a reminder was also given to file reply. It was presumed, on filing reply there may arise necessity of personal hearing, if at all. Otherwise, omission to file reply would mean the assessee has no defence to the demand. He relies on sub-section (4) in section 75.
3. Petitioner is relying on directions given in the show cause notice. It was in respect of a demand. Any defect in the show cause notice would cause violation of principles of natural justice. On query made Mr. Mishra in fairness submits, time be extended for petitioner to file reply and thereafter in event personal hearing is sought, it will be given.
4. In view of aforesaid, impugned demand is set aside and quashed. Petitioner has two weeks from date to file reply to the show cause. In event it does file reply, in it request may be made for personal hearing or separately thereafter.
5. The writ petition is disposed of.
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