Facts: The Petitioner, Pidilite Industries Limited, sought to transition input tax credit from the erstwhile tax regime to the Goods and Services Tax (GST) regime by filing Forms GST TRAN-1 and TRAN-2. The Revenue initiated an audit to verify these claims and subsequently issued a show cause notice in December 2021, questioning credits amounting to approximately Rs. 22.42 crores. During the adjudication process, the Respondent's officers conducted a physical verification of the Petitioner's voluminous records and prepared verification reports dated 27th January 2025 and 3rd February 2025. Despite the Petitioner’s repeated written requests and oral submissions during the personal hearing, these verification reports were not furnished to them. On 5th February 2025, the Respondent no. 3 passed an Order-in-Original confirming the demand of tax, interest, and penalties, while simultaneously admitting in the order that certain records could not be fully verified due to "paucity of time" and a "time crunch".
Procedural Posture: The Petitioner approached the High Court of Judicature at Bombay under Article 226 of the Constitution of India, seeking a Writ of Certiorari to quash the Order-in-Original dated 5th February 2025 on the grounds of violation of principles of natural justice.
Issue: Whether the failure to furnish internal verification reports to the assessee, coupled with passing an adjudication order without complete verification of records due to time constraints, constitutes a violation of the principles of natural justice.
Holding: Yes, the Court held that the non-furnishing of verification reports and the hurried passing of the order without complete verification amounted to a gross breach of the principles of natural justice.
Reasoning: The Court reasoned that since the verification reports were of primary relevance to the conclusions reached in the impugned order, furnishing them to the Petitioner was "imperative" to ensure a fair hearing. Adopting a position or forming an opinion "behind the back" of the Petitioner without granting them an opportunity to rebut the findings in the reports is legally unsustainable. Furthermore, the Court observed that the Respondent no. 3 acted in "haste", as evidenced by the order's own admissions that all invoices could not be verified due to workload. The Court emphasized that an onerous duty is cast upon tax officials to pass orders only after a complete and lawful verification of the record. Consequently, a "hurried exercise" that ignores voluminous evidence provided by the taxpayer cannot be sustained in law.