2022 (12) TMI 856 - HC - GST

Violation of principles of natural justice - validity of assessment order - no personal hearing was accorded to the petitioner before passing order impugned despite the request made - HELD THAT - From perusal of Section 75(4) of the Act, 2017, it is evident that opportunity of hearing has to be granted by the authority under the said Act where either a request is received from the person chargeable with tax or penalty for opportunity of hearing or where any adverse decision is contemplated against such person. Thus, where an adverse decision is contemplated against a person even he need not to request for opportunity of personal hearing and it is mandatory for the authority concerned to afford opportunity of personal hearing before passing any order adverse to such person. In view of the legislative mandate, in case of non-affording of opportunity of hearing by the assessee by intimating him the date, time and venue for personal hearing, the assessment order was found to be in violation of the principles of natural justice. The Article 226 of the Constitution of India confers discretionary power on the High Court, however, in case of availability of alternative remedy, as self-restraint, not as a rule of law, the High Court could not entertain the writ petition and may relegate the person approaching it to avail the alternative remedy. However, there are certain exceptions to the rule of alternative remedy as settled by the Apex Court in a catena of decisions and one of them is in violation of principles of natural justice, which is prejudicial to the interest of the writ petitioner - It is evident that the order of assessment dated 13.9.2022 was passed by the respondent no.2 under Section 74 of the Act, 2017 for the assessment year 2017-18 without affording opportunity of personal hearing as sought by petitioner. The act of the respondent no.2 in denial of the opportunity of personal hearing to the petitioner is in clear contravention of the statutory mandate under Section 75(4) of the Act, 2017. The element of principles of natural justice incorporated in the statutory provisions cast a mandate on the statutory authority to follow the procedure for finalization of its action. The assessment order dated 06.09.2022 as rectified on 13.9.2022 is, thus, found to be illegal being in contravention of provisions of Section 75(4) of the Act, 2017 and is hereby set-aside. The matter is remitted back to the respondent no.2 to pass a fresh order strictly in accordance with law after affording opportunity of hearing to the petitioner herein - Petition allowed by way of remand.

Summary

Issues:
Violation of principles of natural justice by not affording opportunity of personal hearing before passing the assessment order.

Analysis:
The petition challenged the assessment order under Section 74 of the Act, 2017, dated 06.09.2022, as rectified on 13.9.2022, for not providing a personal hearing despite the petitioner's request in response to a show cause notice. The key contention was the absence of intimation regarding the date, time, and venue of the personal hearing before passing the impugned order. The respondent argued that no further personal hearing was required as the petitioner did not respond to a previous notice from 2020. However, the petitioner relied on a Division Bench decision emphasizing the mandatory nature of personal hearing under Section 75(4) of the Act, 2017, even without a specific request. The Court determined that the failure to provide an opportunity for personal hearing violated principles of natural justice, making the assessment order illegal.

In analyzing Section 75(4) of the Act, the Court emphasized that the authority must grant a hearing when contemplating an adverse decision, irrespective of a formal request from the taxpayer. The Court cited the legislative mandate requiring the authority to afford a personal hearing before making any adverse decision, highlighting the importance of adherence to natural justice principles. The Court clarified that the absence of a specific request for a personal hearing does not exempt the authority from providing such an opportunity, as it is a mandatory requirement under the law.

The Court scrutinized the notice issued to the petitioner, noting that while the petitioner had opted for a personal hearing in their reply, the respondent failed to provide the scheduled date, time, and venue for the hearing. This omission was deemed a violation of the petitioner's right to a fair hearing. The Court further emphasized that the availability of an alternative remedy, such as an appeal under Section 107 of the Act, does not preclude the Court from entertaining a writ petition in cases of substantial violations of natural justice principles.

Consequently, the Court set aside the assessment order dated 13.9.2022, directing the respondent to issue a fresh order after granting the petitioner a proper opportunity for a personal hearing. The Court instructed the petitioner to cooperate in the proceedings and attend the hearing as scheduled. The writ petition was allowed, emphasizing the importance of upholding natural justice principles in administrative proceedings.

In conclusion, the judgment underscored the significance of affording a personal hearing to taxpayers as mandated by the law, highlighting the Court's role in ensuring procedural fairness and upholding principles of natural justice in administrative actions.