2023 (2) TMI 933 - HC - GST

Violation of principles of natural justice - opportunity of personal hearing - opportunity of hearing denied because the option 'No' was marked against the option for personal hearing (in the reply to the show-cause-notice), submitted through online mode - HELD THAT - There are complete agreement with the view taken by the coordinate bench in Bharat Mint Allied Chemicals 2022 (2) TMI 350 - ALLAHABAD HIGH COURT . 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. Here, it is noted that the impugned order itself has been passed on 21.10.2022, while reply to the show-cause-notice had been entertained on 14.09.2022. 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 matter is remitted to the respondent no.2/Assistant Commissioner, State Tax, Sector-6, Aligarh 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 dated 21.10.2022 for tax period July 2017 to March 2018 - Denial of opportunity of oral hearing before the Assessing Authority.

In the judgment delivered by the Allahabad High Court, the primary issue revolved around the challenge to an order dated 21.10.2022 passed by the Assistant Commissioner, State Tax, Sector-6, Aligarh for the tax period July 2017 to March 2018. The petitioner contended that the Assessing Authority denied them the opportunity of oral hearing, which was a violation of Section 75(4) of the U.P. GST Act, 2017. The petitioner argued that the notice issued to them did not provide any opportunity for personal hearing, thus depriving them of a chance to present their case.

The petitioner relied on a previous decision of a coordinate bench of the High Court in Bharat Mint & Allied Chemicals case, emphasizing the mandatory nature of providing an opportunity of personal hearing before passing an adverse assessment order. The petitioner also cited a decision of the Gujarat High Court in M/S Hitech Sweet Water Technologies Pvt. Ltd. case to support their argument regarding the necessity of affording a personal hearing.

On the contrary, the counsel for the revenue contended that the petitioner had declined the opportunity of hearing by selecting 'No' in the online reply to the show-cause notice, and therefore, could not claim any error in the subsequent order. However, the High Court, after considering the arguments from both sides and examining Section 75(4) of the Act, agreed with the view expressed in the Bharat Mint & Allied Chemicals case. The Court emphasized that the Assessing Authority was obligated to provide an opportunity of personal hearing before making an adverse decision, irrespective of the petitioner's initial choice regarding personal hearing.

The High Court further highlighted the importance of granting a genuine opportunity of hearing, especially in cases involving significant civil liabilities. Upholding the principles of natural justice, the Court stressed the necessity of ensuring that such opportunities are not merely procedural formalities but are substantial and meaningful. The Court emphasized that providing a fair hearing not only upholds the rules of natural justice but also leads to more informed and just decisions, benefiting the overall process of justice delivery.

Consequently, the High Court allowed the writ petition, setting aside the impugned order dated 21.10.2022. The matter was remitted back to the Assistant Commissioner, State Tax, Sector-6, Aligarh, with directions to issue a fresh notice to the petitioner within two weeks, ensuring the petitioner's right to a proper hearing before any further proceedings. The Court emphasized the need for expeditious resolution of the matter while upholding the principles of natural justice and fair procedure.