Department Cannot Pass an Order on the Date of Personal Hearing: Madras High Court
Case Overview
The Hon’ble Madras High Court ruled in the case of M/s. SS Traders v. Joint Commissioner (ST) (Intelligence) [Writ Petition No. 15363 of 2021, dated August 16, 2024] that issuing an Assessment Order on the same day as the personal hearing was procedurally improper. Therefore, the Court quashed the order and remanded the case for reconsideration, setting out specific conditions for the next steps.
Facts of the Case
- Petitioner: M/s. SS Traders, a company involved in the sale of Thermo Mechanically Treated (TMT) Bars for construction projects.
- Show Cause Notice (SCN): Issued on February 11, 2021.
- Personal Hearing Date: April 12, 2021.
- Assessment Order: A 105-page order was issued on the same day as the hearing, April 12, 2021.
Petitioner’s Arguments
The Petitioner presented the following points:
- The goods were not received.
- The Input Tax Credit (ITC) was claimed in accordance with GST laws.
- The tax liability for post-GST turnover had already been settled, including applicable interest.
Revenue Department’s Allegations
The Revenue Department argued that ITC was wrongly claimed due to non-compliance by the supplier. Additionally, they issued the Impugned Order without adequately considering the Petitioner’s submissions, which the Court later found problematic.
Key Legal Question
The Court considered the central question: Can the Department issue an Assessment Order on the same day as the personal hearing?
Court’s Ruling
- Violation of Natural Justice:
The Court determined that issuing an order on the same day as the hearing left insufficient time for a thorough review of the Petitioner’s arguments. As a result, this violated the principles of natural justice. - Quashing the Order:
Consequently, the Court quashed the Impugned Order and treated it as an addendum to the SCN. This highlighted the need for proper deliberation before issuing a final decision. - Case Remanded:
The Court directed the Department to pass a fresh order, with the following stipulations:- The Petitioner must deposit 10% of the disputed tax within six weeks.
- The Petitioner must submit a reply to the Impugned Order.
Failure to comply would allow the Department to take further action, including enforcement.
Key Takeaways
- Fairness in Legal Proceedings:
The Court emphasized that providing adequate time for consideration ensures fairness in the legal process. - Risk of Prejudgment:
Immediate orders raise concerns about whether all evidence has been properly considered, which may lead to an unfair decision. - Upholding Due Process:
The Court reinforced the importance of issuing decisions that are both impartial and well-reasoned, aligning with the principles of natural justice.
