HC penalises GST Officer liable for gross violation of the principles of natural justice

The High Court of Delhi in the matter of M/S JUPITER EXPORTS Vs. COMMISSIONER OF GST has penalised GST Officer liable for gross violation of the principles of natural justice.

The present petition has been filed, inter alia, seeking setting aside of the demand order dated 25.03.2021, passed by the respondent under Section 74(9) of the Central Goods and Services Tax, 2017 (hereafter ‘the CGST Act’), raising a total demand of Rs.6,67,74,062/-, which includes the tax amount of Rs.2,88,90,416/-, interest for a sum of Rs.89,93,230/-, and penalty to the tune of Rs.2,88,90,416/- for the tax period of April 2018 to March 2019 (hereafter ‘the impugned order’).

The petitioner has challenged the impugned order principally on the ground that the same has been passed in gross violation of the principles of natural justice as the petitioner was not afforded an opportunity of personal hearing before passing of the impugned order by the respondent.

Learned counsel for the petitioner submits that the impugned order has been admittedly passed without granting any personal hearing to the petitioner. He states that the petitioner has been mulcted with a huge demand of tax along with the penalty, without affording the petitioner any opportunity of hearing. He relies upon the judgment passed by the High Court of Madras in Amman Match Company v. Assistant Commissioner of GST & C. Ex. Madurai : 2018 (363) E.L.T. 120 (Mad.); judgments passed by the Bombay High Court in BA Continuum India Pvt. Ltd. v. Union of India and Others : W.P (L) No. 3264/2020 on 08.03.2021 and DBOI Global Service Pvt. Ltd. v. Union of India : 2013 (29) S.T.R 117 (Bom.) in support of his contention that the orders passed without affording any opportunity of personal hearing are liable to be set aside.

He further relies on the circular dated 10.03.2017 issued by the Government of India through the Ministry of Finance, which was addressed to all Principal Chief Commissioners. The said circular specifically instructs that at least three opportunities of personal hearing should be given with sufficient interval of time so that Noticee may avail the opportunity of being heard. A separate communication is required to be made to the Noticee for each opportunity of personal hearing. Learned counsel, thus, submitted that the impugned order has been passed without adhering to the procedure prescribed by the authorities. He further submits that the impugned order, even otherwise, is a non-speaking order and has failed to take into consideration the written reply to the Show Cause Notice filed on behalf of the petitioner.

As discussed above, it is the respondent who has in fact admitted to the nature of hearing being given to the petitioner. In fact, no affidavit has been filed by the respondent to raise a plea that the present case involved disputed questions of fact. Despite the period of two years having elapsed, the objection as to availability of alternate remedy is taken for the first time while arguing and that too in the absence of any affidavit. The present case is a clear case of violation of the provisions of the Act as well as the violation of principles of natural justice and is a fit case for exercise of discretionary jurisdiction of the High Court under Article 226 of the Constitution of India.

The conduct of the respondent, as discussed above, is highly improper. Almost two years of the judicial time has been wasted only for the reason that respondent at first wanted to place the counter affidavit on record and then sought further time to file counter affidavit. The matter in the meantime was listed before this Court as well as before the learned Registrar on various occasions. The respondent in utter disregard to the judicial time and to the statement made before the Court as well as before the learned Registrar then decided to contest the present writ petition without filing any affidavit of the concerned officer. These kind of practices cannot be countenanced. The same has the effect of not only causing harassment to the litigants but also wasting the precious judicial time of the Court. This Court, therefore, considers it apposite to impose a cost of ₹5,000/- on the respondent. The cost is directed to be deposited with the Delhi State Legal Services Authority within a period of four weeks. The order be also sent to the Commissioner of GST, Department of Trade and Taxes, Vyapar Bhawan, IP Estate, New Delhi for necessary information and compliance and if it is found that there is dereliction of duties on the part of the concerned officer, appropriate action for recovery of the amount from the salary of the officer be taken.

In view of the above, we set aside the impugned demand notice dated 25.03.2021 and remand the matter to enable the respondent to pass a fresh order after affording the petitioner a due opportunity to be heard.

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