Order Without Opportunity to Reply Violates Natural Justice: Madras High Court
In a significant judgment, the Madras High Court in Sundarapandian v. State Tax Officer-1 [W.P. (MD) 17429/2024, dated July 29, 2024] ruled that issuing an order without providing the taxpayer an opportunity to respond to a Show Cause Notice (SCN) violates the principles of natural justice. This decision highlights the importance of due process in GST proceedings.
Case Overview
Facts
- Notices Issued
- First, the Petitioner, Sundarapandian, received notices in FORM DRC-01A on October 26, 2023, and FORM DRC-01 on November 15, 2023, for the assessment year 2018-19.
- Subsequently, the notices were followed by an Impugned Order dated February 12, 2024.
- Petitioner’s Contention
- According to the Petitioner, the Impugned Order was issued without prior notice.
- As a result, the Petitioner argued that the principles of natural justice had been violated, since no opportunity was given to respond to the SCN.
- Respondent’s Argument
- On the other hand, the State Tax Officer contended that the notices were posted on the GST common portal.
- Furthermore, they argued that the Petitioner failed to participate in the proceedings despite being notified.
- In addition, they pointed out that the Petitioner had the option to seek an alternative remedy under Section 107 of the CGST Act by appealing the order.
Key Issue
The critical question before the Court was:
Was the order issued without providing an opportunity to reply to the SCN?
High Court’s Decision
1. Violation of Natural Justice
The Court determined that issuing an order without allowing the Petitioner to reply to the SCN was a clear violation of the principles of natural justice.
2. Remittance of the Case
- Consequently, the Court quashed the Impugned Order.
- It also remanded the case back to the Respondent for fresh adjudication based on merits.
- Moreover, the Court clarified that the Impugned Order would now serve as an addendum to the SCN.
3. Directions to the Petitioner
- The Petitioner was instructed to file a consolidated reply within 30 days of receiving the Court’s order.
- Additionally, the Court directed the Petitioner to deposit 20% of the disputed tax using the electronic cash ledger.
Key Takeaway
This judgment underscores the necessity of granting taxpayers a fair opportunity to respond to notices before passing orders. It further reinforces the importance of adhering to the principles of natural justice to ensure transparency and fairness in GST proceedings.
