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2025 (5) TMI 1344 - HC - GSTChallenged the impugned ex-parte orders passed without hearing and SCN - Difference/discrepancy between Form GSTR-3B and Form GSTR-2A - failure to respond to the show cause notices - non-consideration of the Circular issued by the Central Government Government of India bearing No. 183/15/2022-GST - bona fide reasons and sufficient cause justifying reconsideration of the matter - HELD THAT - In view of the specific assertion on the part of the petitioner that his inability and omission to submit the reply to the show cause notice and participate in the proceedings was due to bona fide reasons unavoidable circumstances and sufficient cause by adopting a justice oriented approach and in order to provide one more opportunity to the petitioner I deem it just and appropriate to set aside the impugned orders and remit the matter back to the respondent for reconsideration afresh in accordance with law by issuing certain directions. In the result I pass the following The Writ Petition is allowed; The impugned orders passed by respondent at Annexures-E1 dated 31.05.2023 E2 dated 06.01.2024 F1 dated 31.05.2023 F2 dated 06.01.2024 H1 dated 06.06.2024 and H2 dated 06.06.2024 are hereby set aside; The matter is remitted back to the respondent for reconsideration afresh in accordance with law bearing in mind the aforesaid Circular bearing No.183/15/2022-GST dated 27.12.2022; Upon the petitioner submitting a reply along with relevant documents to the show cause notice on 28.04.2025 the respondent shall afford a reasonable opportunity to the petitioner and hear him and proceed further in accordance with law. It is further made clear that in the event petitioners do not appear on 28.04.2025 the present order shall stand automatically recalled/cancelled and the present petition shall stand revived/ restored without further orders and without reference to the Bench.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court in this writ petition include:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Validity of the adjudication orders under Section 74(9) of the GST Act Relevant legal framework and precedents: Section 74(9) of the GST Act empowers the tax authorities to adjudicate cases of tax evasion after issuance of a show cause notice and following due process. The principles of natural justice mandate that the person affected must be given an opportunity to be heard before passing an order adversely affecting his interests. Precedents emphasize that ex-parte orders without hearing the affected party are generally unsustainable unless the party deliberately avoids participation. Court's interpretation and reasoning: The Court noted that the petitioner had filed GSTR-3B returns for the relevant periods but did not respond to the show cause notices issued by the respondent. The respondent proceeded to pass adjudication orders ex-parte on the basis of discrepancies between GSTR-3B and GSTR-2A forms. However, the Court observed that the petitioner asserted that the failure to respond was due to bona fide reasons and unavoidable circumstances. Key evidence and findings: The material on record showed that the petitioner did not submit any reply to the show cause notices dated 31.01.2023. The impugned orders dated 31.05.2023, 06.01.2024, and recovery notices dated 06.06.2024 were passed without the petitioner's participation. The petitioner contended non-receipt of the show cause notices and reliance on Circular No. 183/15/2022-GST was not considered by the respondent. Application of law to facts: The Court held that since the petitioner's non-participation was claimed to be for sufficient cause and bona fide reasons, and the orders were passed ex-parte, the principles of natural justice were not complied with. The failure to consider the relevant Circular also vitiated the orders. Treatment of competing arguments: The respondent argued that the petitioner did not exercise due diligence and thus the ex-parte orders were justified. The Court, however, favored a justice-oriented approach, giving weight to the petitioner's explanation and the need for adherence to natural justice. Conclusions: The Court concluded that the impugned orders were liable to be set aside for non-compliance with natural justice and non-consideration of relevant Circulars. Issue 2: Whether the matter should be remitted for fresh adjudication Relevant legal framework and precedents: It is well-established that when procedural irregularities are found in adjudication proceedings, the appropriate remedy is often to set aside the impugned orders and remit the matter for fresh consideration in accordance with law and after affording a reasonable opportunity of hearing. Court's interpretation and reasoning: The Court, adopting a justice-oriented approach, deemed it appropriate to set aside the impugned orders and remit the matter back to the respondent to reconsider the case afresh. The Court emphasized the need to consider the Circular No. 183/15/2022-GST dated 27.12.2022, which was not taken into account earlier. Key evidence and findings: The petitioner's assertion of bona fide reasons and unavoidable circumstances for non-response, coupled with the absence of any hearing before passing the ex-parte orders, justified a fresh opportunity. Application of law to facts: The Court ordered that the petitioner should appear before the respondent on a specified date to submit his reply and relevant documents. The respondent was directed to provide a reasonable opportunity of hearing and proceed thereafter in accordance with law. Treatment of competing arguments: The respondent's contention that the petitioner's inaction disentitled him to relief was rejected in favor of ensuring procedural fairness and adherence to natural justice. Conclusions: The Court ordered setting aside the impugned orders and remitting the matter for fresh adjudication after hearing the petitioner. 3. SIGNIFICANT HOLDINGS The Court held:
Core principles established include:
Final determinations on each issue:
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