Tag: Opportunity of Personal Hearing

Assessee could not represent properly due to Hospitalization – Order Set Aside and remanded back

Citation:

Hemanta Kumar Sharma vs. Commissioner (Audit) GST and Central Excise

[2025] 170 taxmann.com 60 (Orissa)[20-12-2024]

High Court of Orissa

Facts of the Case:

  1. A Show Cause Notice dated 17th August 2023 and an Order dated 13th December 2023 was issued demanding Penalty.
  2. Assessee was hospitalized between 22nd April 2023 to 6th June 2023 and again from 15th October 2023 to 17th March 2024 and he was seriously ill during these days. He has sent his Accountant to appear for the Personal Hearing and that accountant could not represent well.
  3. Department submitted that the assessee was given the opportunity for Personal Hearing and further, the right to appeal was lost, as the due date has expired.
  4. It was held that the assessee needs to be given one last oppportunity to represent his case, since if he becomes ill and gets hospitalized again, he may not be able to put forth his contentions any more.
  5. Hence, the Order is set aside and it was ordered to provide one further opportunity to the assessee and to pass the order afresh .

9 days is not reasonable time to reply to Show Cause Notice – Audi Alteram Partem Violated – SCN is invalid

Citation:

Raymond Ltd. Vs. Union of India

Writ Petition No. 26693 of 2022 – Hon’ble High Court of Madhya Pradesh

[2023] 157 taxmann.com 654 (Madhya Pradesh)

Facts of the Case:

  1. A Show Cause Notice (SCN) was issued on 03-09-2022 under Section 73 of CGST Act, 2017, affording 30 days of time for the petitioner (Raymond Ltd) to respond.
  2. Order of Demand was issued on 12-09-2022 (Within 9 days of issue of SCN).

Grounds for Filing the Petition:

The following three grounds were preferred:

  1. Denial of Reasonable Opportunity: Though the SCN has provided 30 days, Order was passed within 9 days, not providing reasonable time to reply to the SCN.
  2. Principle of Audi Alteram Partem Violated: SCN is not self-contained – It fails to inform about the material of adverse nature which constituted the foundation of the SCN, thereby disabling the petitioner to respond. Hence, Principle of Audi Alteram Partem (Hear the Other Side) was violated.
  3. Opportunity of Personal Hearing was not afforded.

Findings:

  1. Though Section 73 does not specify a time period to respond to SCN, the statute contemplates affording reasonable opportunity to reply. Section 73(2) states that SCN needs to be issued at least 3 months prior to the issue of the Order u/s. 73(10)
  2. Concept of reasonable Opportunity demands that reasonable time to reply should be not less than 15 days at least.
  3. As per Section 73(8), time period provided for payment of tax, interest, and penalty is 30 days from the date of SCN(For the proceedings in respect of the SCN to be considered as deemed to be concluded). Hence, the reasonable period for responding to the SCN ought to be 30 days.
  4. Any SCN should contain enough and adequate material which motivated the authority to take a view against the noticee. If the contents of the SCN are lacking in Material particulars or are vague in regard to any entries contained therein, then it would be vulnerable to judicial review.
  5. Hence, the present SCN falls short of minimum period of 30 days to afford reasonable opportunity to noticee to respond and also appears to be lacking in material particular.

Order:

  1. The Impugned SCN dated 03-09-2022 and the Order dated 12-09-2022 are set aside
  2. Revenue is at liberty to issue fresh and legal SCN and proceed after affording reasonable and sufficient opportunity of being heard, to the petitioner.
  3. The petitioner shall be entitled to a cost of Rs. 10,000 to be paid by the respondents and compliance report to be filed by them (respondents) in Registry within 60 days.

Relevant Provisions:

Section 73(1) and (2) of CGST Act:

(1) Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded, or where input tax credit has been wrongly availed or utilised for any reason, other than the reason of fraud or any wilful-misstatement or suppression of facts to evade tax, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilised input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under section 50 and a penalty leviable under the provisions of this Act or the rules made thereunder.

(2) The proper officer shall issue the notice under sub-section (1) at least three months prior to the time limit specified in sub-section (10) for issuance of order.

Section 73(8):

Where any person chargeable with tax under sub-section (1) or sub-section (3) pays the said tax along with interest payable under section 50 within thirty days of issue of show cause notice, no penalty shall be payable and all proceedings in respect of the said notice shall be deemed to be concluded.

Section 73(10):

The proper officer shall issue the order under sub-section (9) within three years from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilised relates to or within three years from the date of erroneous refund.

Where the right of Personal Hearing is not waived, Ex Parte order cannot be passed

Citation:

Kuehne Nagel (P.) Ltd. Vs. State of Maharashtra – Writ Petition No. 15210 of 2023

[2023] 157 taxmann.com 366 (Bombay)

Hon’ble High Court of Bombay

Relevant Facts:

  1. The assessee has in their reply to SCN specifically requested for Personal Hearing, but while submitting the reply in the GST Portal, they have checked the box “No” with regard to selection of Option for Personal Hearing.
  2. Hence, the department has not granted Personal Hearing.

Provisions governing grant of Opportunity of Personal Hearing:

Section 75(4):

An opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person.

Section 75(5):

The proper officer shall, if sufficient cause is shown by the person chargeable with tax, grant time to the said person and adjourn the hearing for reasons to be recorded in writing:

Provided that no such adjournment shall be granted for more than three times to a person during the proceedings.

Findings:

  1. This is an Inadvertent error on the part of the petitioner in ticking the Box “No”, because in the written reply to the Show Cause Notice, they have expressly requested for Personal Hearing.
  2. The department was under an obligation to grant Personal Hearing.
  3. The adjudicating officer (AO) was required to take into consideration the specific request. A Mechanical approach was adopted by AO in only noticing the box where the petitioner has inadvertently put a tick mark on “No”.
  4. This was not a case where the petitioner has expressly waived its right of Personal Hearing.
  5. Section 75(4) is applicable and the impugned order is in breach of Principles of Natural Justice and is contrary to Section 75(4).

Order:

  1. The Impugned Order is Quashed and Set Aside.
  2. The Petitioner shall be granted an Opportunity of Personal Hearing and after considering the contentions of the petitioner, appropriate Order shall be passed within 4 Weeks.