Gujarat HC: Telephonic Call Not Personal Hearing Under GST, Order Quashed
Gujarat HC: Telephonic Call Not Personal Hearing Under GST, Order Quashed
In order to begin litigation against any person, it is essential to contact that person through a legally allowed way before issuing a final order, as stated under Section 75(4) of the GST Act. A phone call cannot replace a personal hearing in cases where the law explicitly requires one, as it will violate natural justice principles. In the present case, the same situation took place, where the company was contacted using a phone call before the issuance of the final order. The court remanded the case to the Assessing Officer (AO).
The current writ petition is being filed by a company named M/S Kcc Buildcon Private Limited in the High Court of Gujarat before the bench comprising Honourable Mr. Justice Bhargav D. Karia and Honourable Mr. Justice Pranav Trivedi. Through the writ petition, the company is challenging an order dated 10.08.2024 passed in Form GST DRC-07 and a show cause notice (SCN) dated 29.05.2024 issued in Form GST DRC-01. This order and SCN notice are related to the tax periods 2021 and 2024.
The company is engaged in construction and infrastructure development. The company was first issued with an SCN dated 08.01.2022, for discrepancies noticed in the company’s GST returns, particularly concerning Input Tax Credit (ITC) claimed on certain purchases. Thereafter, an intimation order was issued in Form GST DRC-01A dated 10.05.2024, raising a demand of Rs. 23,01,066, and thereafter, an impugned notice dated 29.05.2024 was issued, raising a total demand of Rs. 32,99,801.
The company legally submitted a reply to the notice on 06.06.2024, explaining that they had not claimed ITC on certain amounts and had already made payments for some disputed amounts through GST DRC-03 on June 3, 2024. Further, they have not committed any sort of fraud in claiming ITC and said the authority has been wrongly assuming jurisdiction over the matter. Further, the company added that proceedings for scrutiny of their returns have already been initiated and, therefore, the impugned notice is without jurisdiction.
One of the key issues the petitioner highlighted is that they were not given any proper chance of a hearing before the issuance of the final order. The petitioner claimed that they were contacted by the tax authorities via phone call, which is not a legal way to contact as required under Section 75(4) of the GST Act and hence, a violation of the principles of natural justice.
When the court analysed the case, it found that the petitioner was merely contacted via phone call and no proper legal hearing opportunity was given to them before the issuance of the final order. The court pointed out that a phone call, even if it involved discussions on the issues, cannot be considered a legitimate way of “personal hearing” under the law. The court highlighted that telephonic conversations cannot replace an in-person hearing. To announce its decision, the court cited a Delhi High Court ruling in M/s. Jupiter Exports and the Bombay High Court ruling in BA Continuum India Pvt. Ltd. In the final order, the court concluded that the impugned order dated 10.08.2024 was in violation of the principles of natural justice and therefore quashed it. Remanded the case to the Assessing Officer (AO) for fresh consideration, asking them to pass a de novo order after properly hearing the petitioner and considering their submissions and evidence.