The Jharkhand High Court has quashed an adjudication order on the ground that a proper show cause notice was not served before concluding the proceedings.
The writ petition by Godavari commodities Ltd challenged the order in the absence of show cause notice (SCN) invoking the rule of natural justice. While allowing the petition, the division ebnch comprising Mr. Justice Aparesh Kumar Singh Hon’ble Mr. Justice Deepak Roshanalso directed the Commissioner of State Tax Department to issue appropriate guidelines regarding the procedure for issuing an SCN that follows due procedure and process of law.
The petitioner is a public limited company that trades coal having an inter-se purchase and sale transaction by and between other coal traders. The tax authorities were not satisfied with the documents furnished by the petitioner to demonstrate its claim towards genuineness of the transactions of purchase and sale of coal. It was further proved that no SCN was issued and only the summary of the SNC which lacked a timeline for the petitioner to reply was issued. Further, an Adjudication order was filed. The learned counsel for the petitioner, Adv. Sumeet Kumar Gadodia and Adv. Shilpil Sandil claimed that the adjudication order was issued with malice in law to somehow justify the issued summary. Adv. P.A.S. Pati and Adv. Ranjana Mukherjee appeared for the CGST and Mr. Ashok Kumar Yadav GA-1 appeared for the state of Jharkhand. The bench consisted of Hon’ble Mr. Justice Aparesh and Kumar Singh Hon’ble Mr. Justice Deepak Roshan.
The Court noted that the issue of whether the very initiation of the adjudication proceeding without the issuance of show cause notice is void ab initio was already settled by a decision of the Coordinate Bench of this Court in the case of M/s NKAS Services Private Limited Vs. State of Jharkhand and ors. It was held in the same that “In absence of clear charges which the person so alleged is required to answer, the notice is bound to be denied proper opportunity to defend itself. This would entail a violation of principles of natural justice which is a well-recognized exception for invocation of writ jurisdiction despite the availability of alternative remedy.”
The petitioner brought forth S.75(4) and S.75(5) of the Central Goods and Services Act which state that ‘an opportunity for a hearing shall be granted upon request ’. It is evident that no such opportunity for a personal hearing was granted to the petitioner. The court also held that “the Adjudication Order is non-est in the eye of the law, as the same has been passed without the issuance of proper show cause notice and, thus, amounts to a violation of principles of natural justice.”
Finally, the court concluded that the issued order was quashed however, the respondents would have the liberty to initiate a fresh proceeding in accordance with the law, if so advised.
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