2024 (4) TMI 772 - HC - GST

Violation of principles of natural justice - No opportunity of 'personal hearing' - mandatory requirement u/s 75(4) of the Uttar Pradesh Goods and Services Tax, Act, 2017 - impugned adjudication order has been passed in breach of principle of natural justice or not - HELD THAT - The significance of the word or'' in Section 75(4) of the UPGST Act, 2017 cannot be underestimated. The usage of the word or'' extends beyond its disjunctive function; it serves as a pivotal indicator of legislative intent regarding the necessity of providing an opportunity for personal hearing. Personal hearing represents a fundamental aspect of procedural fairness and natural justice, ensuring that individuals have the opportunity to present their case, respond to allegations, and address any concerns or mitigating factors directly to the decision-maker. It is a vital safeguard against arbitrary or unjust decisions. The inclusion of or'' in Section 75(4) of the UPGST Act, 2017, emphasizes the dual nature of the obligation to provide a personal hearing, accommodating both proactive requests from individuals seeking to defend their interests and reactive responses to adverse orders contemplated by tax authorities. In either scenario, the statutory mandate remains clear the individual must be afforded an opportunity for personal hearing before any final determination is made regarding tax or penalty imposition. Moreover, the statutory mandate for personal hearing reflects an acknowledgement of the complex and multifaceted nature of tax and penalty determinations, which often involve intricate legal and factual considerations. Personal hearing provides a forum for nuanced discussion and exploration of these complexities, enabling decision-makers to make well-informed and equitable decisions based on a comprehensive understanding of the circumstances at hand. This Court in M/s Shree Sai Palace v. State of U.P. and Another 2024 (3) TMI 49 - ALLAHABAD HIGH COURT relying on two judgments of coordinate Bench of this Court in Bharat Mint and Allied Chemicals v. Commissioner Commercial Tax and Others 2022 (3) TMI 492 - ALLAHABAD HIGH COURT and M/s Primeone Work Force Pvt. Ltd. v. Union of India , 2024 (1) TMI 625 - ALLAHABAD HIGH COURT , in similar facts and circumstances has held that no orders can be allowed to pass through the legislative barriers of natural justice erected to safeguard individual rights and prevent abuse of power and that the opportunity of hearing is required to be afforded to the petitioner before passing orders. Thus, let there be a writ of certiorari issued against the order dated July 12, 2023 and the order dated August 18, 2022. These orders are quashed and set aside. This writ petition is, accordingly, allowed.

Summary

Issues involved:
The issue involves a writ petition under Article 226 of the Constitution of India challenging an order passed by the Additional Commissioner, Grade - 2, for the tax period of October, 2021, due to the lack of personal hearing as mandated by Section 75(4) of the Uttar Pradesh Goods and Services Tax Act, 2017.

Summary:

Issue 1: Opportunity of Personal Hearing
Upon review, it was found that the petitioner was not provided with a "personal hearing," which is a mandatory requirement under Section 75(4) of the Uttar Pradesh Goods and Services Tax Act, 2017. The significance of the word "or" in Section 75(4) cannot be underestimated. It indicates the necessity of providing an opportunity for personal hearing in two distinct scenarios: either upon application by the individual subject to penalty or tax imposition, or in the event of contemplation of an adverse order. Personal hearing is crucial for procedural fairness and natural justice, ensuring individuals can present their case, respond to allegations, and address concerns directly to the decision-maker. The statutory mandate for personal hearing acknowledges the complexity of tax and penalty determinations, requiring a comprehensive understanding of circumstances before making final determinations.

Issue 2: Legal Precedent
The Court referenced the case of M/s Shree Sai Palace v. State of U.P. and Another, where it was held that orders cannot bypass the barriers of natural justice, emphasizing the necessity of affording the opportunity of hearing before passing orders. Citing judgments from Bharat Mint and Allied Chemicals v. Commissioner Commercial Tax and M/s Primeone Work Force Pvt. Ltd. v. Union of India, the Court reiterated the importance of upholding individual rights and preventing abuse of power through the provision of a fair hearing.

Judgment:
In light of the above, a writ of certiorari was issued against the orders dated July 12, 2023, and August 18, 2022, quashing and setting them aside. The respondent No. 3/Joint Commissioner, Corporate Circle, State Tax, was directed to grant the petitioner a personal hearing and subsequently pass a reasoned order within six weeks. The writ petition was allowed, emphasizing the importance of procedural fairness and natural justice in administrative proceedings.