2025 (2) TMI 62 - HC - GST

Violation of principles of natural justice - service of SCN - no opportunity of personal hearing granted - HELD THAT - Considering the facts and circumstances of the present case and the provisions of Section 73 read with Section 75(4) of the WBGST/CGST Act 2017 this Court is of the view that proper officer is bound to afford an opportunity of hearing where either a request in writing is received by him from the person chargeable with tax or penalty or where any adverse decision is contemplated against such person. To afford opportunity of hearing is a statutory mandate which cannot be violated by proper officer and in the event such of violation the order passed by the proper officer cannot be sustained. Under the circumstances the impugned order dated 29th August 2023 passed by the proper officer for the period 2022-2023 cannot be sustained and deserves to be quashed and the matter deserves to be remanded to the concerned authority to pass an order afresh in accordance with law after affording reasonable opportunity of hearing to the petitioner. Petition disposed off by way of remand.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal question considered in this judgment is whether the adjudicating authority under the WBGST/CGST Act, 2017 is required to provide an opportunity for a personal hearing to the petitioner before issuing an adverse decision, specifically in the context of a show cause notice issued without scheduling a personal hearing.

ISSUE-WISE DETAILED ANALYSIS

Relevant Legal Framework and Precedents

The legal framework central to this issue is Section 75(4) of the WBGST/CGST Act, 2017. This section mandates that an opportunity for a personal hearing must be granted if a written request is made by the person chargeable with tax or penalty, or if an adverse decision is contemplated against such a person. The precedent cases cited include the Division Bench judgment in "Goutam Bhowmik vs. State of West Bengal" and the Allahabad High Court's decision in "Bharat Mint and Allied Chemicals v. Commissioner of Commercial-tax." Both cases emphasize the mandatory nature of granting a personal hearing under similar circumstances.

Court's Interpretation and Reasoning

The Court interpreted Section 75(4) as imposing a statutory obligation on the adjudicating authority to provide a personal hearing when an adverse decision is contemplated. The Court reasoned that the absence of a specified date, time, and venue for a hearing in the show cause notice indicated a failure to comply with this statutory requirement. The Court relied on the reasoning in the cited precedents, which underscored the necessity of a personal hearing to ensure fair adjudication.

Key Evidence and Findings

The key evidence was the show cause notice issued to the petitioner, which included a note "N.A." in the personal hearing column, indicating no opportunity for a hearing was provided. This omission was critical as it demonstrated non-compliance with the statutory mandate of Section 75(4).

Application of Law to Facts

Applying the law to the facts, the Court found that the adjudicating authority's failure to provide a personal hearing violated the mandatory provisions of Section 75(4). This non-compliance rendered the adjudication order unsustainable. The Court emphasized that the statutory mandate for a hearing is not contingent upon a request from the petitioner when an adverse decision is anticipated.

Treatment of Competing Arguments

The Court addressed the respondent's implicit argument that the absence of a request for a hearing might justify the lack of a hearing. However, the Court dismissed this argument by clarifying that the statutory obligation to provide a hearing exists independently of any request when an adverse decision is contemplated.

Conclusions

The Court concluded that the adjudication order dated 29th August 2023 was unsustainable due to the failure to provide a personal hearing, as required by Section 75(4). The Court quashed the order and remanded the matter to the concerned authority to pass a fresh order after affording the petitioner a reasonable opportunity for a hearing.

SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning

The Court reiterated the legal principle from the cited precedents: "An opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person."

Core Principles Established

The judgment established the principle that the statutory requirement for a personal hearing under Section 75(4) is mandatory and not contingent upon a request from the affected party when an adverse decision is contemplated. This principle ensures the protection of procedural fairness in the adjudication process under the WBGST/CGST Act, 2017.

Final Determinations on Each Issue

The final determination was that the impugned adjudication order was quashed due to the failure to comply with the mandatory hearing requirement. The matter was remanded to the adjudicating authority to issue a fresh order after providing the petitioner with the opportunity for a personal hearing.