Facts of the Case

The petitioners approached the Kerala High Court challenging the validity of a final order passed by the State Tax Authorities under Section 129(3) of the CGST/SGST Acts.

The petitioners contended that the authorities had issued a notice dated 25.08.2022 requiring them to appear for a personal hearing on 01.09.2022 and permitting them to file objections up to that date. However, despite granting such time, the authorities passed the final order on the very same day the notice was issued, i.e., 25.08.2022, without waiting for the expiry of the time granted and without hearing the petitioners.

The petitioners challenged the order as being in violation of the statutory requirement of granting an opportunity of hearing before passing an order under Section 129.

Issues Involved

  1. Whether a final order under Section 129(3) can be passed before the expiry of the time granted for filing objections and personal hearing.
  2. Whether passing such an order violates the mandatory requirement of hearing under Section 129(4).
  3. Whether the detention order was liable to be quashed for violation of principles of natural justice.

Petitioners' Arguments

  • The notice dated 25.08.2022 specifically fixed 01.09.2022 as the date for personal hearing.
  • The same notice also allowed the petitioners time up to 01.09.2022 to submit objections.
  • Despite granting this opportunity, the authorities passed the final order on 25.08.2022 itself.
  • No opportunity of hearing was actually provided.
  • The action violated the mandatory provisions of Section 129(4) and principles of natural justice.
  • Therefore, the final order deserved to be set aside.

Respondents' Arguments

The learned Senior Government Pleader appeared on behalf of the State and opposed the writ petition.

Court Order / Findings

The Kerala High Court observed that the notice itself had granted the petitioners time until 01.09.2022 to appear for personal hearing and to file objections.

The Court held that once such time had been granted, passing the final order on the very same day the notice was issued was wholly unwarranted, illegal, and contrary to the provisions of Section 129(4).

Accordingly, the Court:

  • Quashed the final order passed under Section 129(3).
  • Remitted the matter to the Assistant State Tax Officer for fresh consideration.
  • Directed the authority to provide the petitioners with an effective opportunity of hearing and consider their objections before passing a fresh order in accordance with law.
  • Directed the petitioners to appear before the authority on the specified date and time.
  • Clarified that the petitioners were at liberty to seek release of the detained vehicle and goods by complying with the conditions prescribed under Section 129(1)(c), and upon such compliance, the authorities should release the goods and vehicle forthwith.

Important Clarification

  • A notice granting time for filing objections and personal hearing cannot be rendered meaningless by passing the final order before the expiry of the time granted.
  • Compliance with the opportunity of hearing under Section 129(4) is mandatory before passing an order under Section 129(3).
  • Violation of statutory hearing requirements amounts to breach of principles of natural justice.
  • Authorities must consider objections and hear the taxpayer before finalising detention proceedings.
  • Taxpayers remain entitled to seek provisional release of detained goods and conveyance by complying with the prescribed statutory conditions.

Section Involved

  • Section 129(1)(c) of the Central Goods and Services Tax Act, 2017
  • Section 129(3) of the Central Goods and Services Tax Act, 2017
  • Section 129(4) of the Central Goods and Services Tax Act, 2017

Link to Download the Order

https://mytaxexpert.co.in/uploads/1785395520_2348compressed.pdf

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