Case Summary: M/s. Kapton Alloys Pvt. Ltd. v. State of Gujarat
Court: High Court of Gujarat at Ahmedabad
Petition No.: Special Civil Application No. 7568 of 2022
Judgment Date: 13 December 2024
Bench: Justice Bhargav D. Karia & Justice D.N. Ray
Category of Dispute: Violation of principles of natural justice – Input Tax Credit / Adjudication proceedings
Relevant Sections: Section 70, Section 74, Section 75(4), Section 83, Section 107 of the CGST Act, 2017
Facts (Para 2–4 of judgment)
M/s Kapton Alloys Pvt. Ltd., engaged in trading iron and scrap, was issued summons under Section 70 of the CGST Act in June 2020. The company submitted multiple replies with supporting documents. Subsequently, a show cause notice under Section 74 was issued on 21.10.2020, to which the petitioner replied in detail on 22.11.2021, expressly requesting a personal hearing (Para 19 of reply). However, despite this, the adjudicating authority passed a demand order in Form GST DRC-07 on 29.12.2021, preceded by provisional attachment under Section 83, without affording an oral hearing.
Questions before the Court (Para 2 & 5)
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Whether the adjudication order could be sustained when the petitioner had specifically requested personal hearing but the same was denied.
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Whether availability of appellate remedy under Section 107 barred writ jurisdiction where there was violation of natural justice.
Observations (Para 8–12)
The Court noted that though the adjudicating authority claimed opportunity was provided, the petitioner’s written reply categorically sought oral hearing. The authority failed to grant it, thereby breaching Section 75(4) of the CGST Act which mandates opportunity of personal hearing if requested. Relying on Whirlpool Corporation v. Registrar of Trademarks (1998) 8 SCC 1, the Court reiterated that existence of alternate remedy is no bar where principles of natural justice are violated.
Judgment (Para 12–13)
The High Court quashed the adjudication order dated 29.12.2021 solely on the ground of violation of natural justice. The matter was remanded back to the adjudicating authority to pass a fresh order after affording personal hearing to the petitioner within 12 weeks.
Cases Referred
| Case | Citation | Verdict / Ratio |
|---|---|---|
| Whirlpool Corporation v. Registrar of Trade Marks | (1998) 8 SCC 1 | Alternate remedy does not bar writ jurisdiction where there is violation of natural justice. |
Between Fine Lines
For businesses, this judgment underscores that a personal hearing is not a formality but a statutory right under Section 75(4) of the CGST Act. Any GST adjudication order passed without honoring a specific request for oral hearing is vulnerable to being struck down, regardless of alternative appellate remedies.
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