2025-VIL-253-ALH
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SGST High Court Cases

GST - Principles of Audi Alteram Partem, Duty to disclose the documents relied on, Opportunity of Hearing - Petitioner was alleged to have wrongly availed input tax credit and refund on the purchase of certain raw materials like glycerin, fatty acid and finishing chemicals. The authorities had also alleged that the petitioner had not produced proper evidence with regard to cancellation of e-way bills - Whether the impugned order imposing the tax demand, interest and penalty on the petitioner violates the principles of natural justice, particularly the Rule of audi alteram partem, and is thus arbitrary and illegal - HELD - The impugned order fails to comply with the principles of natural justice. Firstly, the order was merely a copy-paste of the reply submitted by the petitioner, indicating a non-application of mind by the authorities. Secondly, the authorities had relied on certain documents and reports in issuing the show cause notice but failed to provide the same to the petitioner, thereby denying the petitioner an opportunity to rebut the same. Thirdly, the petitioner had provided expert opinions to establish that the raw materials were actually used in the manufacturing process, but the authorities had simply brushed aside this explanation without any further examination or testing of the fabrics - the principles of natural justice, particularly the rule of audi alteram partem, require that the person affected by an administrative or quasi-judicial decision must be given a reasonable opportunity to present their case. The authorities are also obligated to disclose the materials and documents relied upon in order to enable the affected party to effectively rebut the same. Failure to do so would amount to a violation of the principles of natural justice, rendering the decision arbitrary and illegal - the rules of natural justice are flexible and their applicability depends on the facts and circumstances of each case. However, the core of the principles, i.e. the guarantee of a fair and reasonable procedure, cannot be compromised. In the present case, the petitioner's rights had been severely prejudiced due to the failure of the authorities to comply with the principles of natural justice - the impugned order is set aside and the writ petition is allowed
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