The Kerala High Court has set aside an order passed under Section 73 of the Goods and Services Tax ( GST ) Act, directing the department to pass fresh orders after affording an opportunity of hearing to the petitioner.
The petitioner, M/s KPB Chits Limited, challenged the order issued by the Assistant State Tax Officer, alleging a violation of natural justice principles.
The petitioner stated that the order is not passed by the officer who heard the petitioner pursuant to notice of hearing, but by an officer who never heard the petitioner.
Hrithwik D. Namboothiri, representing the petitioner, contended that the order has been passed in violation of the principle ‘he who decides must hear’ and is against the provision under Section 75(4), which mandates personal hearing in cases where an adverse decision is contemplated. Accordingly, the petitioner filed the writ petition to quash the order.
On instructions, Jasmine, the Government Pleader, submitted that the officer who passed the order did not hear the petitioner.
The court observed that “the doctrine ‘he who hears must decide/he who decides must hear’ applies to statutory authorities and their decisions, but not to institutional decisions, which negate the doctrine. The determination as to whether tax has not been paid, short paid, or erroneously refunded, or where input tax credit has been wrongly availed or utilised, etc., requires individual adjudication and decision by the ‘proper officer’. If the officer who hears it does not render the decision determining the tax, it would amount to a violation of principles of natural justice.”
The Single Bench of Murali Purushothaman further observed that “Section 75(4) of the KGST/CGST Act provides that an opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person. The object of the provision is to ensure a fair determination of tax.”
The Kerala High Court found that the order had been passed in violation of the principles of natural justice and the mandate of Section 75(4) of the KGST/CGST Act and directed the Assistant State Tax Officer to pass fresh orders after granting an opportunity of hearing to the petitioner and in accordance with the law.
The petitioner has been instructed to appear before the officer on 18.06.2024, with a one-month timeline provided for the issuance of fresh orders.
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