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2023 Supreme(Kar) 1425
IN THE HIGH COURT OF KARNATAKA
B.M. Shyam Prasad, J.
M/s KBL SPML 25JV – Petitioner
Versus
The Authority for Advance Rulings in Karnataka Goods and Services Tax – Respondent
Writ Petition No. 1119 of 2023
Decided On : 12-04-2023
Advocate Appeared:
For the Petitioner: Veena J. Kamath
For the Respondent: K. Hema Kumar
Headnote:(A) Central Goods and Services Tax Act, 2017 - Section 98(2) - Karnataka Goods and Services Tax Act, 2017 - Denial of opportunity to show cause - Petitioner's application for advance ruling rejected without hearing, violating principles of natural justice. (Paras 1-5)
(B) Judicial Interpretation - The opportunity of hearing required by law cannot be rendered a mere formality. Court decides on the necessity of reconsideration of application if procedural rights are violated. (Paras 4-8)
Facts of the case:
The petitioner challenged the rejection of their application for advance ruling due to expiration of the corresponding contractual period and lack of notice for the reason cited.
Findings of Court:
The court found that the denial of an opportunity to be adequately informed of grounds for rejection constituted a violation of natural justice and thus permitted restoration of the application for reconsideration.
Issues: Whether the respondent provided due opportunity to the petitioner, and whether procedural rights were upheld in the advance ruling process.
Ratio Decidendi: The court ruled that an opportunity of hearing should not be an empty formality and emphasized the importance of adhering to the principles of natural justice in administrative proceedings.
Result: Petition allowed in part; the respondent's order quashed and application restored for reconsideration.
| Table of Content |
|---|
| 1. petitioner challenges rejection of ruling application (Para 1) |
| 2. importance of meaningful hearing opportunity emphasized (Para 2 , 5 , 6 , 8) |
| 3. petitioner denied opportunity for hearing effectively (Para 3 , 4) |
| 4. procedural appeals against advance ruling authority's decisions (Para 7) |
ORDER :
1. The petitioner is aggrieved by the respondent's order dated 29.11.2022 [Annexure-A] under Section 98 (2) of the Central Goods and Services Tax Act, 2017 and KARNATAKA GOODS AND SERVICES TAX ACT , 2017 [for short, 'CGST Act/KGST Act]. The petitioner's application is rejected as contemplated under Section 98 (2) of the CGST Act/KGST Act without being admitted for detailed hearing. The petitioner's grievance with the order dated 29.11.2022, apart from the merits of the reasons assigned, is that its application is rejected without due opportunity to show cause against the reason assigned.
2. On the previous hearing date, Mr. Hema Kumar K, the learned Additional Government Advocate, had drawn the attention of this Court's order dated 16.04.2019 by a Single Judge of this Court in W.P.No.57937/2018 [United Breweries Limited v. State of Karnataka] to assert that this petition may have to be placed before a Division Bench of this Court. Ms. Veena J Kamath and Mr. Hema Kumar K are heard in the light of the petitioner's grievance and the aforesaid submissions.
3. The respondent has rejected the petitioner's application as contemplated under Section 98 (2) of the CGST/KGST Act recording that the petitioner, who had the benefit of contract for construction of pumping stations and reservoirs as also for Operation and Maintenance work between 01.11.2014 and 31.10.2021, has filed application for advance ruling on 07.09.2022 after the expiry of the corresponding contractual period. The respondent, interpreting the expression as found in Section 97(2)(g) of the KGST/CGST Act, has opined that the phrase 'being undertaken' can only refer to an ongoing and continuous supply and with the petitioner' contractual period having expired, the application cannot be admitted.
4. Ms. Veena J Kamath submits that the petitioner was extended the opportunity of personal hearing as contemplated under Section 98 of the CGST/KGST Act, but the petitioner's representative was not put on notice that the application would be rejected on the ground as aforesaid, and in the absence thereof, the opportunity of hearing is rendered a mere formality. Mr. Hema Kumar is not able to controvert the submission that the petitioner is not informed that the application could be rejected without admission for the reason now assigned in the impugned order.
5. This Court is of the considered view that opportunity of hearing as contemplated under Section 98 (2) cannot be an empty formality, and the petitioner should have been informed that the application could he rejected without admission on the ground the corresponding contractual period has expired. Therefore, this Court is persuaded to opine that the opportunity of hearing contemplated is rendered a mere formality. The petitioner must therefore have appropriate liberty to file additional plea to show cause against such reasoning and the respondent must reconsider the application.
6. A coordinate bench of this Court, while considering the orders emanating under the provisions of Section 100 of the CGST/KGST Act in W.P.No.57937/2018, has held as follows:
"The Hon'ble Apex Court in Columbia Sportswear Company, supra, has observed that o. writ may remain pending in the High Court for years, first before a learned Single Judge and thereafter m Letters Patent Appeal before the Division Bench and as a result the object of chapter XIX-B of the Act which is to enable an applicant to get an advance ruling in respect of a transaction expeditiously would be defeated. Hence, it is held that when an advance ruling of the Authority is challenged before the High Court under Article 226 and/or 227 of the constitution, the same should be h
