A GST demand order issued against Kapton Alloys Private Limited has been set aside by the Gujarat High Court, citing a breach of the principles of natural justice. The court ruled that the adjudicating authority failed to provide a personal hearing, even after the taxpayer requested one.
Under Articles 226 and 227 of the Constitution, the petition filed contested the order on December 29, 2021, based on the reason that it was furnished without considering the taxpayer’s submissions and supporting documents.
Kapton Alloys, which is in the trading of iron and scrap material, had been issued a summons u/s 70 of the GST Act, to which it duly replied. U/s 74 a show cause notice was subsequently issued, and the company submitted a detailed reply along with supporting documents.
However, the adjudicating authority proceeded with the order without granting the requested personal hearing, directing the challenge before the High Court.
The petitioner relied on the ruling of the Supreme Court in Whirlpool Corporation v. Registrar of Trade Marks (1998) 8 SCC 1, which demonstrates that a writ petition is maintainable when there is a violation of natural justice, even if an alternative remedy is there.
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The Assistant Government Pleader, representing the state, claimed that a chance for hearing has been furnished as recorded in the order. However, the court discovered a denial in the adjudicating authority’s observations.
The authority mentioned that the applicant had not asked for a hearing; the applicant’s answer asked for one. It was ruled by the court that the same procedural lapse directed to a breach of Section 75(4) of the CGST Act, which obligates a personal hearing before adjudication if asked.
The Gujarat HC, quoting the Supreme Court’s precedent in Whirlpool Corporation, held that the order was not valid due to procedural lapses. The court quashed the demand order and remanded the case to the adjudicating authority for the fresh adjudication post, granting the applicant a personal hearing.
The authority has been asked to complete the procedure within 12 weeks, assuring compliance with the due process and principles of natural justice.
| Case Title | M/S. Kapton Alloys Private Limited vs State of Gujarat |
| Citation | NO. 7568 of 2022 |
| Date | 13.12.2024 |
| For the Petitioner | Mr. Varis V Isani |
| For the Respondent | Mr. Varis V Isani |
| Gujarat High Court | Read Order |
