In a recent decision, the Orissa High Court addressed a significant procedural error in the case of Rajkishor Pati v. State of Odisha & Ors., where a demand order was issued under Section 74 of the OGST Act for alleged wrongful Input Tax Credit (ITC). The proceedings were flawed from the start as they were initiated with an incorrect GSTIN, which did not belong to the petitioner, Rajkishor Pati. Despite this error, the authorities confirmed the demand without amending the GSTIN and failed to consider the petitioner’s response.
The core issue was whether a demand order could stand when the adjudication process was defective due to the incorrect GSTIN, and whether the lack of consideration for the petitioner’s reply violated principles of natural justice. The court found that the proceedings were fundamentally flawed because the demand was raised against the wrong GSTIN, undermining the entire order's validity.
The court also noted that the failure to consider the petitioner’s reply and the denial of a proper hearing further compounded the procedural defects. Consequently, the High Court quashed the impugned order and remitted the matter back to the appropriate authority. The court instructed that a fresh, reasoned order should be issued after correcting the GSTIN and ensuring that the petitioner is given a fair hearing. This decision underscores the importance of accurate procedural conduct and adherence to natural justice principles in legal proceedings.
Order date: 21 Aug 2024
Parties: Rajkishor Pati v. State of Odisha & Ors.
Facts
- The petitioner, Rajkishor Pati, was issued a demand order under Section 74 of the OGST Act for alleged wrongful ITC.
- The proceedings, including notices in Form GST DRC-01 and DRC-07, were initiated with an incorrect GSTIN, which did not belong to the petitioner.
- Despite this, the authority proceeded to confirm the demand without correcting the GSTIN error and without considering the petitioner’s reply.
Issue
- Whether a demand order can be sustained when the wrong GSTIN is mentioned in the proceedings, thereby making the adjudication defective from the outset.
- Also, whether the failure to consider the reply and denial of effective hearing amounted to violation of principles of natural justice.
Order
- The Orissa High Court held that raising demand against the wrong GSTIN vitiates the proceedings, as the very foundation of the order is incorrect.
- It further noted that ignoring the reply and not granting a proper hearing compounded the illegality.
- The impugned order was quashed, and the matter was remitted to the proper authority to pass a fresh, reasoned order after correcting the GSTIN and giving due hearing to the petitioner.
