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2025 (5) TMI 376 - HC - GSTChallenge to order passed by the respondent and the order of rejection of the rectification application - personal hearing not provided to the petitioner - Violation of principles of natural justice - HELD THAT - In the case on hand the respondent issued a show cause notice dated 26.04.2023. Unfortunately the same was unnoticed by the petitioner since the same was uploaded in the GST Portal but not directly served on the petitioner hence the petitioner failed to file reply however the respondent without affording an opportunity of personal hearing to the petitioner passed the impugned order dated 29.08.2024. This Court is not inclined to set aside the impugned order passed by the respondent dated 29.08.2024 however considering the fact that the issue pertains to the wrong entries made in the GSTR-3B (Tbl 6A) and GSTR-3B (Tbl 6I) as the value that has to be specified in GSTR-3B (Tbl 6A) was wrongly indicated in GSTR-3B (Tbl 6I) and vice versa and the said errors could be rectified if an opportunity of hearing is granted to the petitioner this Court deems that it would be appropriate to set aside the order dated 26.12.2024 and remand the matter for re-consideration The order of rejection of the rectification application filed by the petitioner dated 26.12.2024 is set aside - Petition allowed by way of remand.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court in this matter include:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Validity of the impugned order dated 29.08.2024 passed without personal hearing Relevant legal framework and precedents: The principles of natural justice mandate that no order affecting the rights of a party should be passed without affording that party an opportunity of being heard. This is a fundamental tenet applicable in quasi-judicial proceedings, including tax and revenue matters. Court's interpretation and reasoning: The Court noted that the show cause notice dated 26.04.2023 was uploaded on the GST Portal but was not directly served on the petitioner. Consequently, the petitioner remained unaware and failed to file a reply. The respondent proceeded to pass the impugned order dated 29.08.2024 without affording the petitioner a personal hearing. Key evidence and findings: The petitioner's failure to receive direct notice was a critical factor leading to non-participation in the proceedings. The respondent's unilateral action in passing the order without hearing was examined in light of the petitioner's right to be heard. Application of law to facts: The Court found that the absence of personal service of the notice and the lack of opportunity for hearing rendered the impugned order procedurally defective. However, the Court did not set aside this order, indicating a nuanced approach considering the subsequent issues raised. Treatment of competing arguments: The respondent justified the order on the basis of notices and reminders issued, but the Court emphasized the importance of actual service and hearing opportunity. Conclusions: While the impugned order was passed without personal hearing, the Court did not wholly invalidate it but recognized procedural infirmity. Issue 2: Justification for rejection of rectification application dated 26.12.2024 Relevant legal framework and precedents: Rectification applications under tax statutes are generally entertained to correct errors apparent on the face of record, subject to procedural compliance including opportunity to be heard. Court's interpretation and reasoning: The respondent rejected the rectification application on the ground that despite issuance of ASMT-10, DRC-01 notices and three reminders, the petitioner neither filed a reply nor appeared for hearing. Key evidence and findings: The petitioner contended that the notices were not properly served and that the rectification application raised genuine errors related to turnover figures and GSTR-3B table misclassifications. Application of law to facts: The Court found that the rejection of the rectification application without affording an opportunity of hearing was improper, especially given the petitioner's claim of non-receipt of notices and the nature of the errors alleged. Treatment of competing arguments: The respondent's reliance on procedural non-compliance was balanced against the petitioner's substantive claim of error and the procedural lapses in serving notices. Conclusions: The Court set aside the rejection order and remanded the matter for fresh consideration with a direction to afford hearing. Issue 3: Validity of petitioner's claim regarding erroneous turnover figures and GSTR-3B table misclassification Relevant legal framework and precedents: Tax returns and related filings must be accurate, and errors in classification or reporting can be rectified through appropriate statutory mechanisms. Court's interpretation and reasoning: The petitioner argued that the turnover for Assessment Year 2019-20 was wrongly taken as NIL and that values specified in GSTR-3B tables 6A and 6I were interchanged, leading to an erroneous conclusion regarding mismatches. Key evidence and findings: The Court noted that the value that should have been specified in GSTR-3B (Tbl:6A) was incorrectly indicated in Tbl:6I and vice versa, which constituted an error apparent on the face of record. Application of law to facts: The Court recognized that such errors are rectifiable and that the petitioner should be given an opportunity to explain and correct the discrepancies. Treatment of competing arguments: The respondent did not dispute the possibility of error but relied on procedural grounds to reject rectification. Conclusions: The Court found merit in the petitioner's claim of errors and emphasized the need for reconsideration after hearing. Issue 4: Whether the respondent should reconsider the rectification application after hearing Relevant legal framework and precedents: Principles of natural justice and statutory provisions governing rectification require that the affected party be heard before final orders are passed. Court's interpretation and reasoning: Considering the procedural lapses and the substantive errors raised, the Court deemed it appropriate to set aside the rejection order and remand the matter for fresh consideration with an opportunity of hearing. Key evidence and findings: The absence of personal hearing and direct service of notices was critical in the Court's decision to direct reconsideration. Application of law to facts: The Court's order mandates that the respondent must pass orders afresh after hearing the petitioner, ensuring adherence to natural justice. Treatment of competing arguments: The Court balanced the respondent's procedural concerns against the petitioner's right to be heard and substantive claims. Conclusions: The matter was remanded for fresh consideration with directions to afford hearing. 3. SIGNIFICANT HOLDINGS The Court held: "Though this Court is not inclined to set aside the impugned order passed by the respondent dated 29.08.2024, however, considering the fact that the issue pertains to the wrong entries made in the GSTR-3B (Tbl:6A) and GSTR-3B (Tbl:6I), as the value that has to be specified in GSTR-3B (Tbl:6A) was wrongly indicated in GSTR-3B (Tbl: 6I) and vice versa and the said errors could be rectified if an opportunity of hearing is granted to the petitioner, this Court deems that it would be appropriate to set aside the order dated 26.12.2024 and remand the matter for re-consideration." Core principles established include the necessity of affording an opportunity of hearing before passing orders affecting rights, especially in tax proceedings involving rectification applications. The Court emphasized that procedural compliance, including proper service of notices, is essential to ensure fairness. The final determinations were:
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