GST: Denial of Effective Hearing a Violation of Justice, Gujarat HC

The non-granting of the effective hearing would be a total breach of natural justice, Gujarat High Court observed.

The petitioner contested the ex-parte decision made by the Commissioner of Central GST and Central Excise, which was purportedly made without consulting the petitioner or its authorized representatives and in a flagrant breach of natural justice principles.

Applicant– M/s Gyscoal Limited, is a company incorporated under the Companies Act., to manufacture their final goods i.e. products of stainless Steel that come under Chapter 72 of the Central Excise Tariff Act (CETA), the other applicant, Viral Shah is the Director of Gyscoal Ltd, Prakash Singh Solanki is the employee of Gyscoal Limited and Rest Petitioners i.e. Tvisha, Magna Vision, and Superfine are the suppliers of raw material to the Gyscoal Ltd.

The whole Show Cause Notice is based on the statements that were recorded under Section 14 of the Central Excise Act, and the challenged judgment validated the demand for M/s Gyscoal Ltd on the basis of those statements that were not submitted to cross-examination.

The only time a personal hearing was available was during a state of emergency. The final hearing of the show-cause notice dated did not occur, and the hearing record referencing just the final hearing of the show-cause notice was returned for correction by the petitioner’s attorney. It is claimed in this record that only one show cause notice was the subject of the hearing.

“All the hearings were granted physical hearing that too during the complete lockdown and the last hearing was a virtual hearing granted only to main notice with respect to only one show cause notice and notice had sent the correction in the record of personal hearing, which is not taken on record.” The Bench of Sonia Gokani, a Chief Justice (Designate), and Justice Sandeep N Bhatt, observed.

The Court further pointed out that at the time notice was given, a reference had been made to the denial of cross-examination, and that this was against the rules of natural justice. Following the petitioners’ hearing, the Court determined that an effective personal hearing was also denied, resulting in a total violation of natural justice.

The Court reached the conclusion that denying a person an effective hearing would be a flagrant breach of natural justice.