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2025 (4) TMI 1585 - HC - GSTViolation of principles of natural justice - impugned orders passed by the first respondent without affording an opportunity of hearing to the petitioner - HELD THAT - In the case on hand it is seen that all the communications/notice which culminated in the impugned orders were uploaded in the GST Portal that too not under the usual column Notices and Orders but under the different column i.e. Additional Notices and Orders column which not only the petitioner but also the petitioner s Accountant was aware - it is crystal clear that the first respondent passed the impugned orders without even affording any opportunity of hearing to the petitioner which are nothing but ex parte orders as the same suffers from violation of principles of natural justice. If at all the petitioner is aggrieved by the impugned orders the petitioner has an effective and efficacious remedy of filing Appeals before the Appellate Authority however before the petitioner could do so since recovery notice was issued and entire disputed tax has been recovered from the petitioner s bank account the petitioner is constrained to approach this Court seeking for setting aside the impugned orders. Once the orders passed in violation of principles of natural justice this Court cannot impose any condition requiring the petitioner to make any deposit - the matters are remanded to the first respondent for fresh consideration. Petition allowed by way of remand.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court include:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Violation of Principles of Natural Justice Due to Non-Communication of Notices Relevant legal framework and precedents: The principles of natural justice require that a person affected by an adverse order must be given a reasonable opportunity to be heard before such order is passed. Under the GST regime, statutory notices and orders are required to be communicated effectively to the taxpayer to enable them to respond or appeal. Court's interpretation and reasoning: The Court observed that all communications culminating in the impugned orders were uploaded exclusively in the 'Additional Notices and Orders' column of the GST Portal, a section not commonly monitored by the petitioner or his accountant. There was no physical service of notices by registered post or any other mode, which is typically expected to ensure actual knowledge. Key evidence and findings: The petitioner was unaware of the proceedings until the recovery notice was issued. The petitioner's accountant also did not inform him due to the notices being placed in an unusual portal section. This demonstrated a failure on the part of the department to ensure effective communication. Application of law to facts: Since the petitioner was not given actual or constructive notice, the orders passed are ex parte and violate natural justice. The Court emphasized that such violation renders the impugned orders liable to be set aside. Treatment of competing arguments: The respondent did not dispute the mode of communication but sought remand for reconsideration. The Court accepted this submission, recognizing the procedural lapse. Conclusions: The impugned orders are quashed for violation of natural justice due to failure in proper communication of notices. Issue 2: Legality of Recovery Proceedings and Refund/Retention of Amount Relevant legal framework and precedents: Recovery of disputed tax amounts under GST must follow due process, including issuance of proper notices and opportunity to contest. Interim retention of amounts during dispute resolution is a matter within the discretion of the authority. Court's interpretation and reasoning: The Court noted that the entire disputed tax amount had already been recovered from the petitioner's bank account before any hearing or appeal opportunity was provided. Despite this, the Court declined to grant interim relief for retention of any portion of the recovered sum at this stage. Key evidence and findings: The petitioner requested retention of Rs. 10,00,000/- in his account. The Court held that such a request could only be considered after reassessment by the authority following due process. Application of law to facts: Since the orders were set aside and remanded for fresh consideration, the question of retention or refund is premature and must await the outcome of reassessment. Treatment of competing arguments: The petitioner sought immediate relief to retain funds, but the Court prioritized procedural regularity over interim monetary relief. Conclusions: No interim retention of disputed tax amount is granted; the issue is deferred pending reassessment. Issue 3: Procedural Remedy and Directions for Fresh Consideration Relevant legal framework and precedents: When orders are passed in violation of natural justice, courts have the power to set aside such orders and remit the matter for fresh consideration in accordance with law. Court's interpretation and reasoning: The Court set aside all impugned orders and remanded the matter to the first respondent for fresh consideration. It directed the petitioner to file a reply with supporting documents within two weeks. The respondent was ordered to issue a clear 14-day notice affording personal hearing and decide the matter within 30 days of receipt of the reply. Key evidence and findings: The absence of any hearing opportunity and the exclusive online communication without physical service justified the remand. Application of law to facts: The Court's directions ensure compliance with natural justice and statutory procedural safeguards before any final order is passed. Treatment of competing arguments: The respondent's request for remand was accepted, balancing the interests of both parties. Conclusions: The matter is remanded with clear procedural directions to ensure fair hearing and lawful decision-making. 3. SIGNIFICANT HOLDINGS The Court held:
Core principles established include the mandatory requirement of effective communication of notices and orders under GST, the indispensability of affording opportunity of hearing before passing adverse orders, and the necessity of adherence to natural justice even in online procedural contexts. The final determinations are:
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