Delhi High Court: In a case wherein the petitioner, Jupiter Exports had challenged the order passed by the respondent, Commissioner of GST on the ground that it grossly violated the principle of natural justice, the Division Bench of Vibhu Bakhru and Amit Mahajan*, JJ., set aside the impugned order and opined that the order was passed in violation of the provisions of Sections 75(4), 75(5) of the Central Goods and Service Tax Act, 2017 (‘CGST Act’) and the principles of natural justice.
Background
The petitioner had filed a petition to set aside a demand order dated 25-03-2021 issued by the respondent, under Section 74(9) of the CGST Act raising a total demand of Rs. 6,67,74,062, which included tax amount, interest, and penalty for the tax period of April 2018 to March 2019 (‘the impugned order’). The petitioner contended that since the petitioner was not given an opportunity of personal hearing before the order was passed, and the impugned order was principally challenged on the ground that it was passed in gross violation of the principles of natural justice.
The petitioner submitted that it had been mulcted with a huge demand of tax along with the penalty, without affording the petitioner any opportunity of hearing. The petitioner also relied on the circular dated 10-3-2017 issued by the Government of India through Ministry of Finance, which specifically instructed that at least three opportunities of personal hearing should be given with sufficient interval of time so that Noticee might avail the opportunity of being heard.
On the other hand, the respondent submitted that the present case was an admitted case where the petitioner had violated the provisions of the CGST Act and the applicability of principles of natural justice was not a rule of thumb or a straight-jacket formula. The respondent further contended that the impugned order was passed after considering the written reply of the petitioner and telephonic conversation with respondent, which should be considered equivalent to the personal hearing. It was further contended by the respondent that the writ petition should not be entertained as the petitioner had an alternate remedy to challenge the impugned order by filing an appeal.
Analysis, Law, and Decision
The Court noted that the provisions relating to determination of tax were provided in Section 75 of the CGST Act and opined that in terms of the provisions of the CGST Act, the Officer concerned was statutorily required to grant an opportunity of hearing in case the request was received in writing from the person chargeable with tax or penalty. It further provided that such a hearing must be given when the Officer contemplates any adverse decisions against such person. Therefore, the principles of natural justice had been incorporated by the Legislature in the statute itself in the form of Section 75 of the CGST Act. Thus, when the statute itself provided that a hearing was required to be given to the person against whom an adverse decision was contemplated, it could not be contended on behalf of the authorities that the same was not mandatory.
The Court opined that the telephonic conversations for a brief period could not be a substitute for a personal hearing or for that matter, be construed as a hearing at all. The Court relied on BA Continuum India Pvt. Ltd. v. Union of India, 2020 SCC OnLine Bom 6118 and opined that personal hearing or the opportunity of being heard was not an empty formality and must be meaningful and sufficient, especially when the statute itself required it. The Court opined that the Officer seemed to be in some sort of hurry to conclude adjudication prior to the end of Financial Year on 31-03-2021 and passed the order, the very next day of filing of the reply.
The Court further relied on State of UP v. Mohammad Nooh, 1958 SCR 595 and Whirlpool Corpn. v. Registrar of Trade Marks, Mumbai, (1998) 8 SCC 1 and opined that where the controversy was purely legal and did not involve disputed questions of fact, the High Court ought not to dismiss the writ petition on the ground of availability of alternate remedy. The Court further opined that “mere availability of alternate remedy, however, did not oust the jurisdiction of the High Court and would not make the writ petition as not maintainable. The availability of alternate remedy did not operate as a bar on the power of the High Court to exercise jurisdiction under Article 226 of Constitution”.
Thereafter, the Court set aside the impugned demand notice and remanded the matter to enable the respondent to pass a fresh order after offering a petitioner a proper opportunity to be heard. The Court also imposed a cost of Rs 5,000 on the respondent, which was to be deposited with the District State Legal Services Authority within a period of four weeks.
[Jupiter Exports v. Commr. of GST, 2023 SCC OnLine Del 4343, decided on 24-07-2023]
*Judgment by- Justice Amit Mahajan
Advocates who appeared in this case :
For the Petitioner: Chinmaya Seth, A.K. Seth, Advocates;
For the Respondent: Sameer Vashisht, ASC Civil, GNCTD.
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