Case Law Details
GK Industries Vs Deputy State Tax Officer (Madras High Court)
Madras High Court held that finalizing of assessment without considering reply and in absence of personal hearing is against the principles of natural justice. Accordingly, order set aside.
Facts- The respondent issued a show cause notice on 27.12.2023 vide the common portal under “View Additional Notices/Orders.” A reminder notice was later issued on 04.2024, for which the petitioner filed a reply in FORM GST DRC-06 on the same day. However, without considering this reply, the respondent passed the impugned order on 26.04.2024, allegedly in contravention of Section 75(4) of the GST Act.
Challenging the order and the summary of Order in DRC-07 dated 26.04.2024, the petitioner has filed this writ petition.
Conclusion- Held that in the present case, the petitioner was deprived of the opportunity to present their case, as the assessment was finalized without considering the reply and in the absence of a personal hearing. Furthermore, 41% of the demanded tax amount was recovered from the petitioner on 25.07.2024, after the impugned order was passed. Since a significant portion of the tax amount has already been recovered, this Court does not impose any further terms. Given these circumstances, the impugned order is liable to be set aside.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
Challenging the order and the summary of Order in DRC-07 dated 26.04.2024, the petitioner has filed this writ petition.
2. The learned counsel for the petitioner submits that the respondent issued a show cause notice on 27.12.2023 vide the common portal under “View Additional Notices/Orders.” A reminder notice was later issued on 04.2024, for which the petitioner filed a reply in FORM GST DRC-06 on the same day. However, without considering this reply, the respondent passed the impugned order on 26.04.2024, allegedly in contravention of Section 75(4) of the GST Act. The learned counsel further submits that after the impugned order was passed, 41% of the demanded tax amount was recovered from the petitioner.
3. Heard the learned Government Advocate (Taxes) appearing for the respondent on the submissions made by the petitioner’s counsel.
4. It is not in dispute that the respondent issued a show cause on 12.2023, followed by a reminder notice on 22.04.2024. The order inaccurately suggests that the petitioner neither utilized the opportunity to respond nor provided any vital documentary evidence. However, the petitioner did file a reply on 22.04.2024, prior to the impugned order being passed on 26.04.2024. This failure to consider the petitioner’s reply and the lack of opportunity for a personal hearing constitutes a violation of the principles of natural justice. The principles of natural justice mandate that a party must be given a fair and reasonable opportunity to present their case. In the present case, the petitioner was deprived of the opportunity to present their case, as the the assessment was finalized without considering the reply and in the absence of a personal hearing. Furthermore, 41% of the demanded tax amount was recovered from the petitioner on 25.07.2024, after the impugned order was passed. Since a significant portion of the tax amount has already been recovered, this Court does not impose any further terms. Given these circumstances, the impugned order is liable to be set aside.
5. Accordingly, the order and the summary of the Order in DRC-07, dated 04.2024 is set aside, and the matter is remanded for reconsideration. The petitioner is directed to submit a fresh reply/objection along with the necessary documents, if any, within two weeks from the receipt of a copy of this order. Upon receipt of such reply/objection, the respondent shall issue a clear 14-day notice for a personal hearing and thereafter pass appropriate orders on merits and in accordance with law as expeditiously as possible.
6. With the above directions, the writ petition is disposed No costs.
Consequently, the connected miscellaneous petitions are closed.
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