2024 (12) TMI 1088 - HC - GST

Challenge to order whereby demand 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 - 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 April 16, 2024 is set aside. The matter is remitted to the respondent no.3 Assistant Commissioner, State Tax, Sector-1, Balia 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 passed by Assistant Commissioner for tax period April 2018 to March 2019 - Denial of opportunity of oral hearing to the petitioner.

Analysis:
The petitioner challenged an order passed by the Assistant Commissioner, State Tax, for the tax period April 2018 to March 2019, claiming that he was denied the opportunity of oral hearing before the Assessing Authority. The petitioner contended that despite a notice being issued, no opportunity of personal hearing was provided by the Assessing Authority. The petitioner relied on Section 75(4) of the U.P. GST Act, 2017, and referred to a previous judgment by a coordinate bench to support the argument that the Assessing Authority was obligated to provide an opportunity of personal hearing before passing an adverse assessment order, especially in cases involving substantial disputed tax demands.

The petitioner argued that the denial of an opportunity of hearing was contrary to established legal principles and cited relevant legal precedents to support the claim. On the other hand, the revenue's counsel argued that the petitioner had declined the opportunity of hearing by selecting the option 'No' in the reply to the show-cause notice submitted online. However, the Court noted that as per Section 75(4) of the Act, an opportunity of hearing should be granted upon a written request from the person chargeable with tax or penalty, or when any adverse decision is contemplated against such person.

The Court agreed with the petitioner's argument and the precedent set by a coordinate bench, emphasizing that the Assessing Authority was obligated to provide an opportunity of personal hearing before passing an adverse order, regardless of the petitioner's initial choice regarding personal hearing. The Court highlighted the importance of providing a genuine opportunity of hearing, especially in cases involving significant civil liabilities, to ensure the principles of natural justice are upheld.

In conclusion, the Court allowed the writ petition, set aside the impugned order, and directed the matter to be remitted to the Assistant Commissioner to issue a fresh notice to the petitioner within two weeks, ensuring that the petitioner is granted a proper opportunity of hearing for the proceedings to be conducted expeditiously. The judgment reaffirmed the significance of affording a genuine opportunity of hearing to parties involved in tax assessments to uphold the principles of natural justice and ensure reasoned and just outcomes.