Facts of the Case

The petitioner, Hindustan Construction Company Ltd., challenged two orders dated 24.06.2022 passed by the Joint Commissioner, State GST, Circle Nimbahera.

  • One order imposed interest and penalty for delayed payment of GST.
  • The other order imposed interest on account of delayed payment of tax.

The petitioner contended that although a detailed reply to the Show Cause Notice had been submitted and a request for personal hearing had been made, the adjudicating authority passed the orders without properly considering the reply and without granting an effective hearing.

The writ petitions were therefore filed challenging the assessment orders primarily on the grounds of violation of the principles of natural justice and non-compliance with the mandatory provisions of the CGST Act.

 

Issues Involved

  1. Whether the GST assessment orders were liable to be quashed for violation of the principles of natural justice.
  2. Whether the adjudicating authority failed to comply with the mandatory requirement of Section 75(6) of the CGST Act, 2017.
  3. Whether an assessment order which does not consider the taxpayer's detailed reply can be sustained in law.
  4. Whether a non-speaking order imposing GST interest and penalty is legally valid.

 

Petitioner's Arguments

The petitioner submitted that:

  • A detailed written reply had already been filed in response to the Show Cause Notice.
  • A request for personal hearing was specifically made before adjudication.
  • The impugned orders were passed without granting an effective opportunity of hearing.
  • The adjudicating authority failed to consider the detailed reply submitted by the petitioner.
  • The assessment orders were completely non-speaking and lacked reasons.
  • The orders violated the mandatory provisions of Section 75 of the CGST Act and the settled principles of natural justice.
  • Therefore, the impugned orders deserved to be quashed and the matter remanded for fresh adjudication.

 

Respondent's Arguments

The respondents submitted that:

  • The petitioner had admittedly deposited tax after delay, making the demand of interest and penalty legally sustainable.
  • The petitioner's representative had appeared before the Joint Commissioner on 30.05.2022 and submitted the reply.
  • During the proceedings, the representative was informed that the next date of hearing would be 22.06.2022.
  • As no one appeared on behalf of the petitioner on the scheduled date, the authority proceeded ex parte.
  • The notice for personal hearing had also been duly dispatched and served.
  • There was no mala fide intention on the part of the adjudicating officer.

However, the State could not dispute that the detailed written submissions filed by the petitioner were not discussed or considered in the impugned orders.

 

Court Order / Findings

The Rajasthan High Court observed that:

  • The adjudicating authority failed to consider the detailed written reply submitted by the petitioner.
  • The impugned orders were sketchy, non-speaking and reflected complete non-application of mind.
  • Section 75(6) of the CGST Act makes it mandatory that every adjudication order must clearly state the relevant facts and the basis of the decision.
  • Since the authority failed to record reasons and ignored the petitioner's reply, the orders violated the mandatory statutory requirement as well as the principles of natural justice.
  • Consequently, the impugned orders could not be sustained in law.

Accordingly:

  • The impugned orders dated 24.06.2022 were quashed and set aside.
  • The petitioner was directed to appear before the Joint Commissioner.
  • The adjudicating authority was directed to provide an opportunity of personal hearing.
  • A fresh speaking order was directed to be passed after considering the petitioner's reply and oral submissions.
  • The show cause notice issued against the Joint Commissioner during the writ proceedings was discharged.

The writ petitions were allowed without any order as to costs.

 

Important Clarification

This judgment reiterates that:

  • Section 75(6) of the CGST Act is mandatory.
  • Every GST adjudication order must contain:
    • Relevant facts,
    • Consideration of the taxpayer's reply,
    • Proper reasoning,
    • Basis for the decision.
  • Mere issuance of a Show Cause Notice or granting a hearing date is not sufficient if the final order does not consider the taxpayer's submissions.
  • Non-speaking assessment orders are liable to be quashed even where the tax liability itself may otherwise exist.
  • The judgment reinforces that compliance with principles of natural justice is indispensable in GST adjudication proceedings.

 

Sections Involved

  • Section 75(6), Central Goods and Services Tax Act, 2017
  • Section 75 – General Provisions Relating to Determination of Tax
  • Principles of Natural Justice

 

Link to download the order-https://www.mytaxexpert.co.in/uploads/1783932356_195compressed.pdf

 

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