2025 (6) TMI 989 - HC - GST

Seeking the details and explanation pertaining to the difference in the value of outward supplies declared in GSTR 1 and value of the E way Bills raised in the financial year 2020-2021 - HELD THAT - The scheme of Section 73 74 and 75 enables the assessee to seek for adjournment not in excess of three times and it is pertinent to note that sub-section 5 succeeds sub-section 4 which enables the assessee to seek for a personal hearing. Section 75 relates to the procedural aspect that is required to be followed by the Authorities in the matter of determination of assessment more particularly of tax that has escaped assessment - If the statute stipulates a matter to be performed in a particular manner the same shall be performed in that manner only. Law in this regard is no more res integra and is well-settled by catena of judgments of the Apex Court. Conclusion - In the case on hand the order does not disclose any justifiable reasons for rejecting the application for request for adjournment and that apart the approach itself appears to be incorrect and contrary to the scheme of Section 75 more particularly sub-section 4 and 5 of Section 75. In that view of the matter the order of assessment is set-aside. The matter is remitted back to the competent authority to proceed from the stage of the 28.11.2024 notice - petition disposed off by way of remand.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court are:

- Whether the Revenue Authority's insistence on conducting a personal hearing prior to the submission of the reply by the petitioner complies with the procedural scheme laid down under the relevant GST provisions, particularly Sections 73, 74, and 75 of the GST Act.

- Whether the petitioner was entitled to seek and be granted an adjournment of the personal hearing date to a time after submission of the reply, and whether the Revenue Authority's refusal or failure to grant such adjournment was justified.

- Whether the assessment order confirming the demand of Rs. 71,57,938/- with interest for the difference in declared outward supplies and E-way bills value was valid, given the procedural irregularities in conducting the personal hearing.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Legality of Conducting Personal Hearing Before Submission of Reply

Relevant Legal Framework and Precedents: The Court examined Sections 73, 74, and 75 of the GST Act, focusing particularly on Section 75 which governs the procedure for assessment where tax has escaped assessment. Sub-sections (4) and (5) of Section 75 explicitly provide for the grant of opportunity of hearing upon written request and the power of the proper officer to grant adjournments if sufficient cause is shown.

Established legal principles mandate that statutory procedures must be strictly followed ("If the statute stipulates a matter to be performed in a particular manner, the same shall be performed in that manner only"), a position supported by a series of authoritative judgments of the Apex Court.

Court's Interpretation and Reasoning: The Court held that fixing a date for personal hearing before the expiry of the last date for submission of the reply is procedurally flawed and contrary to the statutory scheme. The hearing is intended to be an opportunity to discuss the reply and submissions made by the assessee; thus, conducting it prior to receiving the reply defeats the purpose.

Key Evidence and Findings: The petitioner's request for adjournment was premised on the need to collate information for the relevant financial year 2020-2021 before submitting a comprehensive reply. The Revenue Authority's insistence on an earlier hearing date was found to be unreasonable and not supported by any justifiable reasons.

Application of Law to Facts: Given the statutory mandate under Section 75(4) and (5), the petitioner's right to submit a reply and seek adjournment before the personal hearing was to be respected. The Revenue Authority's approach was inconsistent with the procedural safeguards envisaged under the GST Act.

Treatment of Competing Arguments: While the Revenue Authority may have sought to expedite proceedings, the Court emphasized that procedural fairness and adherence to statutory provisions cannot be sacrificed for expediency. No valid justification was provided for denying the adjournment or for scheduling the hearing prematurely.

Conclusion: The Court concluded that the Revenue Authority's approach was "akin to putting the cart before the horse" and was "contrary to the scheme of the Act."

Issue 2: Validity of the Assessment Order Confirming Demand

Relevant Legal Framework: The assessment under GST for tax escaped is governed by the provisions of Sections 73 and 74, with procedural safeguards under Section 75. The assessment order must be passed following due procedure, including proper opportunity of hearing and consideration of the reply of the assessee.

Court's Interpretation and Reasoning: Since the personal hearing was conducted in breach of the procedural scheme, the subsequent assessment order confirming the demand was vitiated. The absence of a proper hearing after receipt of the reply undermines the validity of the order.

Key Evidence and Findings: The assessment order dated 28.11.2024 confirming the demand of Rs. 71,57,938/- was based on the alleged difference in declared outward supplies and E-way bills value. However, the procedural irregularity in conducting the hearing prior to the reply was a critical defect.

Application of Law to Facts: The Court applied the principle that non-compliance with mandatory procedural requirements renders the assessment order liable to be set aside.

Treatment of Competing Arguments: The Revenue Authority's interest in timely assessment was acknowledged but held subordinate to the requirement of procedural fairness. No substantive justification was offered for the procedural breach.

Conclusion: The Court set aside the assessment order and remitted the matter back to the competent authority to proceed afresh from the stage of issuance of the show-cause notice dated 28.11.2024.

3. SIGNIFICANT HOLDINGS

- "The approach of the Authorities on insistence of having a personal hearing prior to submitting a reply is contrary to the scheme of the Act."

- "If the statute stipulates a matter to be performed in a particular manner, the same shall be performed in that manner only."

- The Court emphasized the procedural provisions of Section 75(4) and (5):

"75. (4) An opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person.

(5) The proper officer shall, if sufficient cause is shown by the person chargeable with tax, grant time to the said person and adjourn the hearing for reasons to be recorded in writing:

Provided that no such adjournment shall be granted for more than three times to a person during the proceedings."

- The assessment order confirming the demand without adhering to the procedural safeguards was set aside.

- The matter was remitted back to the Revenue Authority to proceed from the stage of the show-cause notice dated 28.11.2024, ensuring compliance with statutory procedure including proper opportunity to submit reply and personal hearing thereafter.