2025 (7) TMI 1606 - HC - GST

Seeking direction to respondent to pass order afresh by considering the replies filed by the petitioner after affording an opportunity of personal hearing - impugne dorder passed within jurisdiction or not - HELD THAT - Instead of filing an appeal against the impugned notice the petitioner has allowed to order to remained. Thus the petitioner is required to pay the differential amount of Rs. 86, 508/- towards tax Rs. 1, 51, 374/- towards penalty and interest which remained has to be quantified under Section 50(1) of the CGST 2017. It is noticed that the petitioner is an assessee who is assessed by the respondent. Therefore the impugned order has been passed by the respondent within the jurisdiction. However it is noticed that the impugned demand covers a period between 2017-18 and 2020-21. It appears that the State Authority had also inspected the premises of the petitioner and issued Show Cause notice bearing in Ref.No.ZD33052425559562 dated 27.05.2024 for the assessment year 2019-20. There is an overlap in the jurisdiction assumed by both the Central authority and State authority. There is a prima facie case that the petitioner refused to pay the higher amount for the tax period 2019-20. Although the issue regarding the jurisdiction is now pending before the Division Bench of this Court pursuant to the order passed by this Court in Varthaman Industries this Court is inclined to set aside the impugned order and remits the case back to the respondent. The case remitted back to the respondent to pass fresh order considering the payments made by the petitioner pursuant to the procedure dated 22.08.2024 - petition disposed off by way of remand.

Summary

ISSUES:

Whether the impugned order confirming tax demand, interest, and penalty under Section 74(9) read with Sections 39, 50(1), and 122(2)(b) of the CGST Act, 2017, and relevant provisions of the TNGST Act, 2017, was validly passed.Whether the petitioner was afforded a proper opportunity of personal hearing before passing the impugned order.Whether there exists an overlap in jurisdiction between the Central and State authorities concerning the tax period 2019-20, affecting the validity of the demand.Whether the impugned order should be set aside and remitted for fresh consideration in light of payments made by the petitioner and pending jurisdictional issues.

RULINGS / HOLDINGS:

The impugned order confirming tax demand, interest, and penalty was passed within the jurisdiction of the respondent but without affording the petitioner an opportunity of personal hearing, which is a procedural lapse.The Court found a prima facie overlap in jurisdiction between Central and State authorities for the tax period 2019-20, raising questions on the validity of the demand.The impugned order is set aside and remitted to the respondent to pass a fresh order considering the payments made by the petitioner pursuant to the procedure dated 22.08.2024, treating the impugned order as corrigendum to the show cause notice.The respondent is directed to complete the fresh adjudication within two months from receipt of the order, ensuring the petitioner is heard before final orders are passed.

RATIONALE:

The Court applied the statutory provisions of the CGST Act, 2017, particularly Sections 39, 50(1), 59, 74(9), and 122(2)(b), alongside relevant provisions of the TNGST Act, 2017, governing tax demand, interest, and penalty.The principle of natural justice requiring an opportunity of personal hearing before passing adverse orders was emphasized as a mandatory procedural safeguard.The Court noted the ongoing jurisdictional dispute between Central and State authorities, which is pending before a Division Bench, and thus avoided adjudicating on the merits of the tax demand for the overlapping period.The decision reflects a procedural safeguard ensuring that payments already made are duly considered and that fresh orders are passed in accordance with law and on merits after hearing the assessee.