Facts of the Case

M/s. VPR Mining Infrastructure Private Limited filed Writ Petition No. 32041 of 2023 before the High Court for the State of Telangana at Hyderabad, challenging an Order-in-Original No. 28/GST/2023-24-Adjn (ADC)-HYD-GST dated 31.07.2023 passed by the Additional Commissioner of Central Tax, Hyderabad Central GST Commissionerate. Respondents also included the Additional Director General of GST Intelligence, Hyderabad Zonal Unit, and the Union of India. The petitioner sought stay of recovery and quashing of the order under the Central Goods and Services Tax Act, 2017, primarily on the ground of violation of the principles of natural justice, even though the order was otherwise appealable. On an earlier date, the Division Bench of Justice P. Sam Koshy and Justice N. Tukaramji had directed the Department to verify whether three personal hearing opportunities, as required by CBEC's own guidelines dated 10.03.2017, had in fact been afforded. The matter was finally decided on 20.12.2023.

Issues Involved

  1. Whether the Order-in-Original dated 31.07.2023 was passed in violation of the principles of natural justice for want of adequate personal hearing opportunities under CBEC's guidelines dated 10.03.2017.
  2. Whether the three notices relied upon by the Department actually amounted to three effective personal hearing opportunities in the very show-cause proceeding culminating in the impugned order.
  3. Whether the writ court could interfere with an appealable Order-in-Original on the specific ground of a natural justice violation.

Petitioner's Arguments

  • The petitioner contended that the authorities failed to adhere to CBEC's guidelines dated 10.03.2017, particularly clause 14.3, which requires a personal hearing opportunity after the show-cause reply, and at least three hearing opportunities before a final order is passed.
  • It was argued that of the three notices claimed by the Department, the notice dated 18.05.2023 was not effectively served, the next notice resulted only in an adjournment sought by the petitioner, and the notice dated 27.06.2023 in fact related to an altogether different show-cause proceeding.
  • The petitioner submitted that, properly counted, it had not been granted three genuine opportunities of personal hearing in the specific show-cause proceeding dated 31.03.2022 that led to the impugned order, rendering it bad in law.

Respondent's Arguments

  • The Department submitted that the impugned order was appealable, and that three notices affording personal hearing had in fact been issued to the petitioner, on 18.05.2023, 01.06.2023 and 27.06.2023, in compliance with the guidelines.
  • Referring to the counter affidavit, Department's counsel maintained that the statutory requirement of personal hearing opportunities had been substantially complied with before the final order was passed.

Court Order/Findings

  • On examining the record, the Court found that the first notice was not effectively served, the second led only to an adjournment at the petitioner's request, and the third notice pertained to a different show-cause proceeding altogether, so the mandated opportunities were not genuinely afforded in this proceeding.
  • The Court noted that it had, in the past, interfered with similarly defective orders and remanded matters for fresh adjudication where the Department's own guidelines on personal hearing were not followed.
  • The Court set aside/quashed the impugned Order-in-Original dated 31.07.2023 for violation of the principles of natural justice and the CBEC guidelines dated 10.03.2017, and remitted the matter to Respondent No. 1 for fresh adjudication, directing the petitioner to appear and submit its explanation without any further separate notice.
  • The writ petition was allowed to the extent indicated, without any order as to costs, and pending miscellaneous petitions were closed.

Important Clarification

Even where an Order-in-Original is otherwise appealable, a High Court can still entertain a writ challenge and remand the matter for fresh adjudication if the taxpayer demonstrates that the three personal hearing opportunities mandated by CBEC's 10.03.2017 guidelines were not genuinely and effectively afforded in the specific show-cause proceeding — merely counting notices issued for unrelated proceedings, or notices that were not served or that only led to adjournments, does not satisfy that requirement.

Sections Involved

  • Central Goods and Services Tax Act, 2017 – governs adjudication of show-cause notices and passing of Orders-in-Original such as the one impugned here.
  • CBEC Circular/Instruction dated 10.03.2017 – lays down internal departmental guidelines requiring at least three personal hearing opportunities before a final adjudication order is passed.
  • Article 226, Constitution of India – invoked to entertain the writ challenge notwithstanding the availability of an appellate remedy, on the specific ground of natural justice violation.

Decision – In Favour of

The Telangana High Court allowed the writ petition and set aside the Order-in-Original for violation of natural justice, remanding the matter for fresh adjudication. This is a clear decision in favour of the Assessee on the procedural question, though the merits of the underlying GST demand remain open for fresh determination after the petitioner is given a proper hearing.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: High Court for the State of Telangana at Hyderabad
  • Case No.: Writ Petition No. 32041 of 2023
  • CNR: Not available on record
  • Coram: Justice P. Sam Koshy and Justice N. Tukaramji
  • Decision Date: 20 December 2023
  • Disposal Nature: Allowed (writ petition allowed)

Link to Download the Order

Download the full judgment (PDF)

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.