2024 (11) TMI 1167 - HC - GST

Challenge to order of demand has been raised against the present petitioner - petitioner was denied opportunity of hearing - violation of principles of natural justice - HELD THAT - The view taken by the coordinate bench in BHARAT MINT AND ALLIED CHEMICALS VERSUS COMMISSIONER COMMERCIAL TAX AND 2 OTHERS 2022 (3) TMI 492 - ALLAHABAD HIGH COURT agreed upon. 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. Not only such opportunity would ensure observance of rules of natural of justice but it would allow the authority to pass appropriate and reasoned order as may serve the interest of justice and allow a better appreciation to arise at the next/appeal stage, if required. The impugned order dated December 21, 2023 is set aside. The matter is remitted to the respondent no.2/Commercial/State Tax Officer, Sector-16, Lakhanpur, kanpur-II, Kanpur Nagar to issue a fresh notice to the petitioner within a period of two weeks from today - petition allowed by way of remand.

Summary

Issues:
Challenge to order raising demand for tax period 2017-18 due to denial of opportunity of oral hearing before the Assessing Authority.

Analysis:
The petitioner challenged an order passed by the Commercial/State Tax Officer, seeking an opportunity of oral hearing before the Assessing Authority. The petitioner contended that he was denied a personal hearing as the notice mentioned "NA" against columns for personal hearing details. The petitioner relied on Section 75(4) of the U.P. GST Act, 2017, citing a previous court decision that emphasized the mandatory nature of affording personal hearing before passing an adverse assessment order.

The respondent argued that the petitioner had declined the opportunity of hearing by marking "No" in the online reply to the show-cause notice. The respondent contended that the petitioner could not claim error in the order subsequently. However, the court emphasized the importance of providing an opportunity of hearing as per Section 75(4) of the Act, irrespective of the petitioner's initial choice regarding personal hearing.

The court agreed with the precedent set in Bharat Mint & Allied Chemicals case, emphasizing that the Assessing Authority must grant an opportunity of personal hearing before making an adverse decision. The court highlighted that in cases involving significant civil liability, ensuring a genuine opportunity of hearing is crucial to uphold principles of natural justice. Granting such an opportunity not only aligns with natural justice rules but also enables the authority to issue a well-reasoned order, facilitating a fair appeal process if needed.

Consequently, the court allowed the writ petition, setting aside the impugned order and remitting the matter to the Commercial/State Tax Officer to issue a fresh notice to the petitioner within two weeks. The petitioner was directed to appear before the authority for expeditious proceedings, ensuring a fair opportunity for a personal hearing and a reasoned decision-making process.