Agrim Chemicals Ltd. VS Principal Commissioner Of Central Tax

In a recent legal case, the arguments presented by Sri Abhinav Mehrotra, representing the petitioner, and Sri Gaurav Mahajan, representing the revenue, shed light on the adjudication order dated 28.10.2020 issued by the Commissioner, Central Tax, GST, Gautambudh Nagar. This order was made in compliance with a directive from the Custom Excise and Service Tax Appellate Tribunal, dated 7.3.2019, which instructed the adjudicating authority to reexamine the case and issue a fresh order.

One primary contention raised against the impugned order is its alleged violation of the fundamental principle of natural justice. The petitioner’s counsel argues that the adjudicating authority relied heavily on a report from the Central Revenue Control Laboratory (CRCL), dated 3.6.2020/13.7.2020, to dismiss the petitioner’s explanation. This report pertains to the chemical composition of two products, “Harvest Plus” and “Cash Plus,” which are relevant to the case.

The CRCL report on “Harvest Plus” describes the sample as a black-colored granular material, consisting of silicates, salts of Fe, Zn, Mg, and other additives, with specific characteristics such as an Ash% of 83.5 and NVR% of 94.6. It suggests potential use as a micronutrient but requires further verification of its actual purpose.

Likewise, the CRCL report on “Cash Plus” describes the sample as a blackish thick liquid, containing nitrogenous material, inorganic materials like K, P, Cu, Co, Fe, Zn, Mn, and vitamins, along with other organic matters. It provides specific constants such as an Ash% of 10.8, NVR% of 37.4, K2Os (n/o) of 3.29, and P2Os (n/o) of 3.16. Similar to the previous product, it suggests potential use as a micronutrient, subject to further confirmation.

The petitioner’s argument implies that the adjudicating authority’s reliance solely on the CRCL report without considering other factors or providing an opportunity for the petitioner to contest the findings violates principles of natural justice. This case underscores the importance of fair procedural practices in administrative adjudication.

The petitioner contends that the CRCL report should have been presented to them, allowing for a reasonable opportunity to respond. Initially scheduled for a hearing on 14.10.2020, the petitioner requested an adjournment and copies of various documents crucial to their defense. These documents included the show cause notice from 25.9.2017, the Commissioner Appeals’ order from 23.3.2018, the CESTAT’s order from 7.3.2019, and the reply to the show cause notice from 18.8.2015.

The revenue, on the other hand, claims that these documents were provided on 15.10.2020, and the subsequent hearing was set for 20.10.2020. However, the impugned order does not specify when the CRCL report was served on the petitioner. It appears that after the hearing on 26.10.2020, the petitioner submitted a document referred to as the “submission of defense reply.” In this submission, the petitioner raised objections and compared the CRCL report with a test report from M/S Cytozyme Sustainable Nutritional Solutions, USA, dated 03.02.2015. This comparison highlighted the presence of certain nutrients in the product “Harvest Plus,” reinforcing the petitioner’s defense.

This detailed account underscores the petitioner’s argument that they were not afforded proper procedural fairness, as they were not given the opportunity to address the CRCL report during the adjudication process. The discrepancy in the timing of document submission and hearing dates raises questions about the fairness of the proceedings. The petitioner’s comparison of test reports seeks to demonstrate inconsistencies and merits further consideration in evaluating the case.

Further analysis of the case reveals a detailed comparison between the test report from the Central Revenue Control Laboratories (CRCL), dated 03.06.2020, and a previous test report from M/S Cytozyme Sustainable Nutritional Solutions, USA, dated 03.02.2015. This comparison highlights the presence of identical nutrients in the product “Horti Crop” (Brand Name Cash Plus), such as Nitrogen (N), Phosphorus (P2O5), Potassium (K2O), Copper (Cu), Cobalt (Co), Iron (Fe), Zinc (Zn), and Manganese (Mn). The petitioner emphasizes the consistency between these reports to bolster their defense.

Furthermore, the petitioner reiterates their defense reply dated 18.08.2015, submitted against a show cause notice dated 31.03.2015, urging the authorities to drop the proceedings initiated based on the show cause notices.

The Commissioner subsequently issued an order on 28.10.2020, extensively referring to the CRCL reports dated 3.6.2020/13.7.2020. However, notably absent from the order is any mention of the petitioner’s objections to these reports.

In light of this, it is significant that during the initial hearing, the court questioned the revenue’s counsel regarding the availability of the complete test report to the petitioner. This query stemmed from the petitioner’s assertion in paragraph 24 of the writ petition that the CRCL reports were first presented to them on 20.10.2020, the date of the virtual hearing.

The revenue authorities responded with a counter affidavit that did not disclose the date of service of the CRCL report. It only mentioned that the petitioner submitted a reply on 26.10.2020.

Based on these pleadings, the court concludes that the assertion in paragraph 24 of the writ petition is admitted by the revenue. Therefore, it is established that the CRCL report was first presented to the petitioner on 20.10.2020, not earlier. Consequently, the petitioner was not provided adequate opportunity to object to the report.

While the court acknowledges the petitioner’s written objection submitted on 26.10.2020, it notes that the impugned order fails to discuss or consider this objection. Moreover, considering the petitioner’s claim that the complete copy of the CRCL report was not supplied to them, the court finds a violation of the principle of natural justice, as the petitioner was not given a reasonable opportunity to object to the adverse material.

In conclusion, the court finds that pursuing an alternate remedy would not serve any meaningful purpose, as argued by the revenue. Therefore, the writ petition is granted. The adjudication order dated 28.10.2020, issued by the Commissioner, Central Tax, GST, Gautambuddh Nagar, is hereby nullified. The case is remanded back to the assessing authority with instructions to issue a fresh order, strictly adhering to legal procedures, and providing the petitioner with a fair opportunity to be heard.

The adjudicating authority is directed to furnish the petitioner with a complete hard copy of the test report relevant to the case within one week from the date of this decision. The petitioner will then have a period of two weeks to submit a detailed reply or objection to the report. Subsequently, the adjudicating authority may schedule a hearing date and proceed to issue an order accordingly. This course of action ensures that the petitioner’s rights are respected and that justice is served in accordance with the law.

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