No Need to Relegate to Alternate Remedy when GST Order Passed in Violation of Natural Justice and Jurisdictional Error: Allahabad HC [Read Order]

The Allahabad High Court has set aside a confiscation and tax demand order passed under the Goods and Services Tax ( GST ) Act, ruling that the adjudication was carried out in violation of the principles of natural justice and beyond the jurisdiction conferred by the show cause notice.

“No useful purpose may be served in relegating the present petitioner to the forum of alternative remedy when the adjudication order is found deficient on jurisdictional ground as also for reason of violation of principles of natural justice and fairness in quasi-judicial proceedings” said the Division Bench comprising Justice Saumitra Dayal Singh and Justice Indrajeet Shukla.

The bench was hearing a petition filed by Ankit Automobiles challenging the order issued by the Assistant Commissioner, CGST and Central Excise.

The impugned order was passed on the strength of a show cause notice dated August 3, 2022, which proposed confiscation of goods valued at ₹9.49 lakh and imposition of penalties under Sections 130 and 122 of the CGST Act, 2017.

The petitioner had submitted a written reply and attended oral hearings, the last being on October 14, 2024.

However, without issuing any further communication or fixing a fresh date of hearing, the authorities passed the final order nearly four months later, confirming tax demands and penalties under Section 74(1) of the Act, even though the show cause notice had not invoked that provision.

The Court observed that the Assessing Officer exceeded the scope of the show cause notice, as no proceedings had been initiated under Section 74 of the CGST Act up to that date.

The Bench held that the order confirming demand under a section not stated in the notice was jurisdictionally defective. It also found that the adjudicating authority had violated natural justice by deciding the matter after a long gap without granting the assessee an opportunity to be heard.

In addition, the court remarked that “It is difficult to accept that the Adjudicating Authority could have passed the order almost four months after the last hearing without fixing any further date and without making any further communication to the petitioner in that regard.”

The high court held that the petitioner could not be relegated to the alternate forum when the impugned order itself suffered from jurisdictional infirmity and violation of fair hearing principles.

Accordingly, the Court set aside the impugned order and remitted the matter to the adjudicating authority to pass a fresh order after giving the petitioner a proper opportunity of hearing.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates