Facts of the Case

The petitioners, Ajayraj Construction Pvt. Ltd. & another, challenged an Order-in-Original dated 19.12.2023, passed by the Adjudicating Authority under the GST regime. The said order disposed of a Show Cause Notice dated 28.04.2022.

As per the impugned order, the authority recorded that:

  • The petitioner had not submitted any written reply to the show cause notice.
  • Despite multiple opportunities, no one appeared for personal hearing.

However, during the proceedings before the Court, it was conceded by the respondent that the petitioner had indeed filed a reply, but the same was not considered by the Adjudicating Authority while passing the final order. 

Issues Involved

  1. Whether an adjudication order can be sustained when the reply filed by the assessee is not considered.
  2. Whether failure to consider a reply amounts to violation of principles of natural justice.
  3. Whether the matter should be remanded for fresh adjudication.

Petitioner’s Arguments

  • The petitioner contended that the impugned order is invalid and unsustainable.
  • It was argued that a reply to the show cause notice had been duly filed, but the same was ignored.
  • Non-consideration of the reply resulted in serious prejudice and denial of fair hearing.

Respondent’s Arguments

  • The respondent acknowledged that although the impugned order recorded non-filing of reply, a reply had in fact been submitted.
  • However, the same appears to have been overlooked by the Adjudicating Authority during adjudication.

Court’s Findings / Order

The Delhi High Court held:

  • Since the reply filed by the petitioner was not taken into account, the impugned order suffers from procedural infirmity.
  • The Order-in-Original dated 19.12.2023 was set aside.
  • The matter was remanded back to the Adjudicating Authority.

The Court directed:

  • The show cause notice shall be re-adjudicated in accordance with law.
  • The petitioner shall be granted one opportunity of personal hearing.
  • If the petitioner fails to appear, the authority may proceed ex parte, but must consider the reply already filed.

Important Clarification

  • The Court expressly clarified that it has not examined the merits of the case.
  • All rights and contentions of both parties are kept open.
  • The order is confined strictly to procedural fairness and natural justice.

Sections / Legal Provisions Involved

  • GST Law – Adjudication Proceedings (Show Cause Notice & Order-in-Original)
  • Principles of Natural Justice (Audi Alteram Partem)
  • Relevant provisions under:
    • Central Goods and Services Tax Act, 2017 (CGST Act) relating to adjudication and demand proceedings

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/SAS09052024CW41452024_142842.pdf

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