The High Court of Kerala allowed a petition that challenged the order which was passed by an officer who never heard the Petitioner. The Bench ruled that the doctrine "he who heard must decide/he who decides must hear" applies to statutory authorities, requiring the "proper officer" to individually adjudicate tax-related issues to uphold the principles of natural justice. It was also emphasized that Section 75(4) of the KGST/CGST Act mandates a hearing if requested in writing or if an adverse decision is anticipated, to ensure fair tax determination.
Brief Facts:
The Petitioner is a registered taxable dealer under the Kerala State Goods and Services Tax Act, 2017/Central Goods and Services Tax Act, 2017 (KGST/CGST Act). The State Tax Officer sent a show cause notice under Section 73(1) of the Act to which the Petitioner replied. The assistant state tax officer finalized the assessment and passed an order under Section 73(9) of the Act. The Petitioner stated that the order was passed by an officer who never heard the Petitioner. Thus, the present petition.
Contentions of thePetitioner:
It was contended that the order passed was against the provision under Section 75(4) which mandates personal hearing in cases where an adverse decision is contemplated and further violated the principle ‘he who decides must hear’.
Observations of the Court:
The Bench expounded that the doctrine "he who heard must decide/he who decides must hear" applies to decisions made by statutory authorities but not to institutional decisions, which negate the doctrine. For tax-related determinations such as unpaid or short-paid taxes, erroneous refunds, or improperly availed or utilized input tax credits, individual adjudication by the designated "proper officer" is necessary. If the officer who hears the case does not make the final decision, it would violate the principles of natural justice.
It was further observed that section 75(4) of the KGST/CGST Act stipulates that a hearing must be granted if a written request is made by the person liable for tax or penalty, or if an adverse decision is anticipated against them and the purpose of this provision is to ensure a fair and just determination of tax.
The Bench held that the order passed violates the principles of natural justice and the mandate of Section 75(4) of the KGST/CGST Act and thus, ordered the respondent to pass new orders after hearing the petitioner.
The decision of the Court:
Accordingly, The Court allowed the petition.
Case Title: M/S. KPB Chits Limited v. Joint Commissioner Tax Payers Services
Coram: Hon’ble Mr. Justice Murali Purushothaman
Case No.: WP(C) No. 17801 of 2024
Advocates for the Applicant: Advs. Mr. P.N. Damodaran Namboodiri, Mr. Hrithwik D. Namboothiri
Advocate for the Respondent: Adv.Ms. Jasmin, Mr. T.C. Krishna
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