2025 (6) TMI 1654 - HC - GST

Maintainability of petition - time limitation - petitioner has filed this writ petition two days after the expiry of the limitation period for filing an appeal under Section 107 of the TNGST Act 2017 - ex-parte impugned order - Non-speaking order - violation of principles of natural justice - HELD THAT - A reading of the impugned order indicates that it is a nonspeaking order and reflects non-application of mind to the reply filed by the petitioner. Therefore this Court has no option except to quash the impugned order and remit the matter back to the respondent to pass a fresh order on merits as expeditiously as possible preferably within a period of three months from the date of receipt of a copy of this order. The petitioner shall file a detailed reply within a period of 30 days from the date of receipt of a copy of this order. Petition disposed off.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court in this matter include:

• Whether the impugned order passed under Section 74 of the Tamil Nadu Goods and Services Tax (TNGST) Act, 2017, for the financial year 2017-18, is valid and sustainable in law.
• Whether the petitioner's reply to the Show Cause Notice (SCN) and related notices was duly considered by the adjudicating authority or whether the order is a non-speaking order reflecting non-application of mind.
• Whether the limitation period for filing an appeal under Section 107 of the TNGST Act, 2017, was complied with by the petitioner.
• The correctness of the confirmation of the tax demand, interest, and penalty imposed on the petitioner under the impugned order.
• The procedural propriety of the adjudication process, including issuance of notices, personal hearings, and consideration of the petitioner's submissions.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity and sustainability of the impugned order under Section 74 of the TNGST Act, 2017

Relevant legal framework and precedents: Section 74 of the TNGST Act, 2017, deals with cases of tax evasion where a show cause notice is issued and an opportunity of personal hearing is provided before confirming the tax demand along with interest and penalty. The adjudicating authority is required to consider the reply of the assessee and pass a reasoned order.

Court's interpretation and reasoning: The Court observed that the impugned order was passed without proper application of mind to the petitioner's reply. The order stated that the petitioner had not submitted original invoices or certificates as required under Section 16(2) of the Act and Circular No. 183-2022, but did not engage with the petitioner's submissions in detail. The order was found to be non-speaking and mechanical, merely confirming the proposal due to non-appearance at personal hearings.

Key evidence and findings: The impugned order itself recorded that the petitioner did not appear for three personal hearings despite reminders and did not file original documents or certificates. However, the petitioner had submitted replies to the notices, which were not adequately considered. The Court noted this procedural deficiency.

Application of law to facts: The Court held that an order under Section 74 must be reasoned and based on proper consideration of the assessee's reply. The failure to consider the reply renders the order liable to be quashed. The absence of personal hearing attendance alone does not justify a non-speaking confirmation of the tax demand.

Treatment of competing arguments: While the revenue argued that the petitioner failed to comply with procedural requirements and did not appear for hearings, the petitioner contended that their replies were filed and ought to have been considered. The Court sided with the petitioner on the ground of non-application of mind by the adjudicating authority.

Conclusions: The impugned order was quashed and the matter remitted for fresh adjudication on merits, with directions to consider the petitioner's detailed reply and pass a speaking order.

Issue 2: Compliance with limitation period for filing appeal under Section 107 of the TNGST Act, 2017

Relevant legal framework and precedents: Section 107 of the TNGST Act provides the right of appeal against orders passed under the Act, subject to prescribed limitation periods.

Court's interpretation and reasoning: The petitioner filed the writ petition two days after the expiry of the limitation period for filing an appeal before the Commissioner. The Court noted this delay but, in view of the procedural infirmities in the impugned order, proceeded to entertain the writ petition.

Key evidence and findings: The writ petition was filed on 05.06.2025, two days beyond the limitation period. No explanation for the delay was recorded in the judgment.

Application of law to facts: The Court exercised its discretionary jurisdiction to entertain the writ petition notwithstanding the delay, given the non-speaking nature of the impugned order and the need to ensure fair adjudication.

Treatment of competing arguments: The respondent relied on the limitation period to oppose the writ petition, but the Court prioritized the substantive issue of non-application of mind.

Conclusions: The limitation issue did not bar the Court from exercising its jurisdiction to quash the impugned order.

Issue 3: Correctness of the tax demand, interest, and penalty imposed

Relevant legal framework and precedents: Under the GST law, tax demands, interest, and penalties can be imposed where tax evasion is established. Section 74 provides the procedural framework for such adjudication.

Court's interpretation and reasoning: The Court did not delve into the correctness of the quantum of tax, interest, or penalty, as the impugned order was quashed for non-application of mind. The Court directed fresh adjudication on merits.

Key evidence and findings: The impugned order quantified the total liability as Rs. 6,45,580, including tax, interest, and penalty. Interest was calculated up to the date of the order, with a direction to compute further interest till payment.

Application of law to facts: Since the order was quashed, the correctness of the demand is to be examined afresh after proper consideration of the petitioner's submissions and documents.

Treatment of competing arguments: The petitioner challenged the order on grounds of procedural impropriety; the respondent upheld the demand based on non-compliance and non-appearance.

Conclusions: The issue remains open for fresh adjudication.

Issue 4: Procedural propriety in issuance of notices and conduct of personal hearings

Relevant legal framework and precedents: The GST law mandates issuance of notices and opportunity for personal hearing before confirming tax demands. Proper communication and recording of proceedings are essential.

Court's interpretation and reasoning: The impugned order recorded issuance of three personal hearing reminders, none of which were attended by the petitioner. However, the petitioner had submitted replies to the notices. The Court found that despite non-appearance, the replies ought to have been considered.

Key evidence and findings: Notices in Forms GST DRC-01A and GST DRC-01 were issued under Sections 73(5) and 74 respectively. Personal hearing notices were issued but no appearance was made by the petitioner.

Application of law to facts: The Court emphasized that non-appearance does not relieve the authority from the obligation to consider written submissions. The absence of a speaking order addressing the replies was fatal.

Treatment of competing arguments: The respondent contended that repeated non-appearance justified confirmation of the proposal. The Court held that this alone cannot substitute for reasoned adjudication.

Conclusions: The procedural requirements were not fully complied with in spirit, necessitating fresh adjudication.

3. SIGNIFICANT HOLDINGS

The Court held that:

"A reading of the impugned order indicates that it is a nonspeaking order and reflects non-application of mind to the reply filed by the petitioner."

"Hence, this Court has no option except to quash the impugned order and remit the matter back to the respondent to pass a fresh order on merits, as expeditiously as possible, preferably within a period of three months."

"The petitioner shall file a detailed reply within a period of 30 days from the date of receipt of a copy of this order."

Core principles established include:

• An order passed under Section 74 of the TNGST Act must be a speaking order reflecting application of mind to the assessee's reply.
• Non-appearance at personal hearings does not absolve the adjudicating authority from considering written submissions.
• Procedural fairness and reasoned adjudication are essential in tax demand confirmation under GST law.
• The Court may entertain writ petitions beyond limitation periods in appropriate cases involving procedural infirmities.

Final determinations:

• The impugned order confirming tax demand, interest, and penalty was quashed for being non