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IN THE HIGH COURT OF DELHI AT NEW DELHI
Vibhu Bakhru, Amit Mahajan, JJ.
HT Media Limited – Appellant
Versus
Union of India & Ors. – Respondents
W.P.(C) 8787 of 2023 & CM APPL. 33163 of 2023
Decided On : 11-07-2023
impugned Show Cause Notice - Delhi Goods and Services Tax Act, 2017 - The court set aside the impugned order and Show Cause Notice, directing the concerned officer to consider the petitioner's response and pass a fresh order after affording the petitioner due opportunity to be heard.
Fact of the Case:
The petitioner impugned an order and Show Cause Notice issued under the Delhi Goods and Services Tax Act, 2017, alleging non-payment of tax without providing detailed reasons for the proposed demand. The petitioner responded to the notice but was not afforded a further opportunity to be heard.
Finding of the Court:
The court found that the impugned Show Cause Notice did not clearly specify the grounds for the proposed demand and that the concerned officer did not consider the petitioner's response. The court also noted the procedural irregularity of affording the petitioner an opportunity to be heard prior to the expiry of the time for responding to the notice.
Issues: Lack of detailed reasons in the Show Cause Notice, failure to consider the petitioner's response, and procedural irregularity in affording an opportunity to be heard.
Ratio Decidendi: An opportunity to be heard is not a mere formality and should be afforded after the noticee has filed a reply. The noticee should be permitted to place their stand on record before being afforded a hearing.
Final Decision: The court set aside the impugned order and Show Cause Notice, directing the concerned officer to consider the petitioner's response and pass a fresh order after affording the petitioner due opportunity to be heard.
JUDGMENT
Vibhu Bakhu, J. The petitioner has filed the present petition impugning an order dated 03.04.2023 (hereafter `impugned order') passed by respondent No. 2.
2. The petitioner also impugns the Show Cause Notice dated 01.08.2022 (hereafter `impugned Show Cause Notice') issued under Section 73 of the Delhi Goods and Services Tax Act, 2017 (hereafter `the Act').
3. It is material to note that the impugned Show Cause Notice alleges that "tax has not been paid or short paid or refund has been released erroneously or input tax credit has been wrongly availed", but does not disclose any detailed reasons for proposing the demand.
4. In terms of the impugned notice, the petitioner was to submit its reply by 01.09.2022 and was also informed of a personal hearing scheduled on 19.08.2022 at 11:00 a.m.
5. As apparent from the face of the impugned Show Cause Notice, the same did not clearly specify grounds on which a demand was proposed to be raised. Although, the said Show Cause Notice did indicate a table mentioning the quantum of tax and interest; it is not clear whether the said tabular statement was related to the proposed demand or called upon the petitioner to justify the same.
6. Curiously, the petitioner was called upon to appear for a personal hearing on a date earlier than the time provided to file a reply. The respondent had also issued another Notice dated 01.08.2022 in Form GST DRC-01. The same indicates that it was accompanied by an audit report dated 29.06.2022.
7. The petitioner responded to the said Show Cause Notice and submitted its reply dated 01.09.2022. The petitioner also requested the concerned officer to afford the petitioner an opportunity of being heard. It is noticed that the said reply spans over thirty-nine pages and according to the petitioner, it has responded to the observations made in the audit report.
8. Admittedly, the concerned officer did not afford the petitioner any further opportunity of being heard and passed the impugned order raising a demand of Rs.29,17,30,644/-. The said order under Section 73 of the Act neither deals with the submissions made by the petitioner in its reply dated 01.09.2022 nor mentions any reason for raising the said demand.
9. Mr. Satyakam, learned counsel appearing for the respondent, states that he has received instructions to the effect that the opportunity of personal hearing was afforded to the petitioner on 19.08.2022 but no one attended the hearing. He has also received instructions to the effect that the petitioner had not opted for personal hearing. However, he does not dispute that the documents placed by the petitioner on record are true copies of the original documents.
10. Concededly, a reply dated 01.09.2022 was furnished by the petitioner. The prayers made at the end of the said reply (in Form GST DRC-06) clearly request the concerned officer for affording the petitioner an opportunity to be heard. Thus this court cannot accept the contention that the petitioner did not opt for a personal hearing or waived its right.
11. It is apparent that the concerned officer has not considered the reply furnished by the petitioner.
12. We are also unable to appreciate the procedure of affording the petitioner an opportunity to be heard prior to the expiry of the time afforded to him for responding to the impugned show cause notice. An opportunity to be heard is not required to be a mere formality. It is to enable the noticee to canvas its case before the concerned officer. The purpose of eliciting a reply to the show-cause notice is to enable the noticee to place his stand on record. Thus, it is apposite that the noticee be permitted to file a reply prior to being afforded a hearing.
13. In view of the above, the impugned order cannot be sustained. We are also inclined to set aside the impugned Show Cause Notice. However, it is apparent that the petitioner has no doubt as to why a further demand is proposed to be raised. Admittedly, it is based on the obs
An opportunity to be heard should be afforded after the noticee has filed a reply, and the noticee should be permitted to place their stand on record before being afforded a hearing.
An unsigned notice or order cannot be considered valid, and the purpose of a Show Cause Notice is to enable the noticee to respond to the specific allegations.
Proper adjudication process and consideration of petitioner's reply before passing an order.
Proper Officer must consider the reply on merits and provide opportunity for clarification or further documents/details before creating demand ex-parte.
The principles of natural justice mandate that a party must be afforded both written and oral opportunities independently, and failure to provide a personal hearing constitutes a procedural deficienc....
Granting an opportunity for response and personal hearing before adjudication based on the peculiar facts and circumstances of the case.
Procedural fairness requires effective notice and personal hearing opportunities, especially in tax assessments, to avoid ex parte orders.
The judgment establishes the requirement of affording a minimum period of 30 days for responding to show cause notices under Section 73 of the CGST Act and emphasizes the need for show cause notices ....
The court emphasized the importance of providing the taxpayer with a fair opportunity to submit relevant documents and have a personal hearing in tax dispute proceedings.
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