Jharkhand HC Directs Tax Authorities To Follow Due Procedure While Passing Orders; Imposes Costs For Passing Order Violating Natural Justice

The Jharkhand High Court directed the state tax authorities to follow due procedure while passing adjudication orders. The Division Bench of Chief Justice Ramachandra Rao and Justice Deepak Roshan stated that “despite directions issued by the Court, it appears that State Tax authorities are continuing to conduct adjudication proceedings in utter disregard to the mandatory provisions of the Act and in violation of the principles of natural justice.” In this case, a show cause notice was issued to the assessee/petitioner on 04.04.2024 fixing date of compliance on 03.05.2024, but, on 03.05.2024, no proceedings were held and first proceeding was held on 05.06.2024 and, on the said date itself an ex-parte order of adjudication was passed. The assessee has challenged the order passed under Section 74 of the Jharkhand Goods and Services Tax Act, 2017 without granting any opportunity of personal hearing to the assessee. The assessee submitted that the order-sheets including adjudication orders would reveal that adjudication orders were passed in flagrant violation of the principles of natural justice as on the first date fixed pursuant to show cause notice itself adjudication orders were passed. The department submitted that prior to issuance of show cause notice, an inspection was made in the premises of the assessee and spot summons were issued to the assessee and even DRC-01A were issued which would demonstrate that there was sufficient compliance of principles of natural justice. The bench after hearing both the sides stated that the proceedings have been conducted in utter violation of the principle of natural justice including the mandatory provisions as contained under Sections 75(4) and 75(5) of JGST Act, 2017. The bench opined that “due to procedure being not followed by State Tax authorities in conduct of adjudication proceedings, huge revenue of the State is otherwise lost which could have been protected, if due procedure is followed while passing adjudication orders.” The bench observed that in the case of M/s. Godavari Commodities Limited v. The State of Jharkhand & Ors. [W.P.(T) No. 3908 of 2020], the Court has already issued directions in the year 2022 itself directing Commissioner of State Tax Department to issue appropriate guidelines/circular/notification elaborating therein the procedure which is to be adopted by State Tax authorities regarding the manner of issuance of show cause notice, adjudication and recovery proceedings, so that proper procedure is followed by State Tax authorities in conduct of the adjudication proceedings. The bench found that the aforesaid directions have not been complied with. In view of the above, the bench allowed the petition and directed the department to pay a cost of Rs.1,00,000/- for each writ petition to the assessee for passing the order blatantly. Case Title: Limra Traders v. The State of JharkhandLL Citation: 2025 LiveLaw (Jha) 20 Case Number: W.P.(T) No. 6027 of 2024 Counsel for Petitioner/ Assessee: Sumeet Gadodia and Shruti Shekhar Counsel for Respondent/ Department: Piyush Chitresh, Sahbaj Akthar, Mukesh Kumar Sinha and Nisith Kumar Sahani Click Here To Read/Download The Order

Jharkhand HC Directs Tax Authorities To Follow Due Procedure While Passing Orders; Imposes Costs For Passing Order Violating Natural Justice

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