2024 (7) TMI 258 - HC - GST

Challenge to order whereby demand in excess has been raised against the present petitioner - petitioner was completely denied opportunity of oral hearing before the Assessing Authority - violation of principles of natural justice - HELD THAT - Once it has been laid down by way of a principle of law that a person/assessee is not required to request for opportunity of personal hearing and it remained mandatory upon the Assessing Authority to afford such opportunity before passing an adverse order, the fact that the petitioner may have signified 'No' in the column meant to mark the assessee's choice to avail personal hearing, would bear no legal consequence. Even otherwise in the context of an assessment order creating heavy civil liability, observing such minimal opportunity of hearing is a must. Principle of natural justice would commend to this Court to bind the authorities to always ensure to provide such opportunity of hearing. It has to be ensured that such opportunity is granted in real terms - The stand of the assessee may remain unclear unless minimal opportunity of hearing is first granted. Only thereafter, the explanation furnished may be rejected and demand created. The impugned order dated 26.12.2023 is set aside - The matter is remitted to respondent no.2/Assistant Commissioner, State Tax, Sector - 2, Pratapgarh, Prayagraj to issue a fresh notice to the petitioner within a period of two weeks from today - Petition disposed off by way of remand.

Summary

Issues:
Challenge to order passed by Assistant Commissioner for tax period 2017-18; Denial of opportunity of oral hearing to the petitioner; Interpretation of Section 75(4) of the U.P. GST Act, 2017; Effect of petitioner declining opportunity of hearing; Observance of principles of natural justice in assessment orders.

Analysis:
The judgment by the Hon'ble High Court addressed the challenge raised against an order passed by the Assistant Commissioner for the tax period 2017-18, where a demand in excess of Rs. 4,31,776.00/- was raised against the petitioner. The main contention in the petition was the denial of an opportunity for oral hearing to the petitioner during the assessment process. The petitioner argued that the Assessing Authority did not provide any opportunity for personal hearing as required by law.

The petitioner relied on Section 75(4) of the U.P. GST Act, 2017, and cited a previous court decision to support the claim that the Assessing Authority was obligated to grant a personal hearing before making an adverse assessment order. The petitioner emphasized that the absence of a hearing before passing a disputed tax demand was against established legal principles. Reference was also made to a decision by the Gujarat High Court to strengthen the argument regarding the necessity of a personal hearing in such cases.

On the other hand, the counsel for the revenue contended that the petitioner had declined the opportunity for a hearing by selecting 'No' in the online reply to the show-cause notice. It was argued that the petitioner could not now claim error in the order due to this refusal of hearing opportunity. However, the High Court, after considering the arguments from both sides and examining the relevant legal provisions, disagreed with this contention.

The High Court concurred with the interpretation of Section 75(4) of the Act as established in a previous case, emphasizing that the Assessing Authority must provide an opportunity for a personal hearing before making an adverse decision. The Court stressed the importance of ensuring minimal opportunity for hearing in cases involving significant civil liabilities, as a fundamental aspect of natural justice.

In conclusion, the High Court set aside the impugned order dated 26.12.2023 and directed the matter to be remitted to the Assistant Commissioner for issuing a fresh notice to the petitioner within two weeks. The Court underscored the necessity of providing a genuine opportunity for hearing to uphold the principles of natural justice and facilitate a fair and reasoned decision-making process in tax assessments.