Order Date: 5 September 2022

Facts-

• The Petitioner, Ujjain Steel Processors is a Partnership Firm, engaged in trading of iron and steel.
• During March’18, the Petitioner purchased steel and made payment of the entire tax liability.  The petitioner was in receipt of Form GST DRC-01A along with letter, wherein an intimation of liability u/s 73(5) /74(5) of the JGST Act, alleging therein that the Petitioner has entered into a business transaction with a non-existing business entity and directed to reverse the wrongly availed ITC with interest and penalty and thereby calculated penalty u/s 74 of the Act and was directed to pay the amount including interest and penalty, failing which SCN u/s 74(1) of the JGST be issued.
• The department suo motu without any information/ notice blocked the credit ledger account of the Petitioner. On 30.07.2020, the Respondent although dropped the proceeding under section 74(1) of the JGST Act; however, initiated proceedings under section 73(1) of the JGST Act and straightaway issued a show cause notice.
• The Petitioner filed this present Writ Petition for quashing/setting aside the ex-parte order and for unblocking credit ledger. 

Issue-

• Whether the writ application filed by the petitioner is justifiable?

Order-

• The Division Bench of Hon’ble High Court observed that no relied upon documents were ever provided to the petitioner nor was opportunity of personal hearing granted. The law casts an obligation upon the parties to serve the documents/inspection report/intelligence note which has been relied upon by either of the parties in a proceedings, which has not been followed in the instant case leading violation of Principles of Natural Justice and also the mandate of the Act.
• The Hon’ble Supreme Court in the case of AYAAUBKHAN NOORKHAN PATHAN VERSUS THE STATE OF MAHARASHTRA & OTHERS has held that in a case where the respondents have relied upon the documents obtained during inspection in the premises of the petitioners on the basis of intelligence note, it should be given to the petitioners to enable them to properly answer the charges there passed upon.
• Thus, it was held that the impugned adjudication ex-pate order dated 15.09.2020, has been passed in utter violation of principles of natural justice and also in utter defiance to the provisions of section 75(4) and section 75(5) of the JGST Act as has been passed without any opportunity of hearing.
• The matter is remitted back to the authority for compliance of the necessary provision especially Section 75(4) of the JGST Act. Consequently, the adjudication order dated 15.09.2020 is quashed and set aside.
• The writ application stands allowed and disposed off.