2025 (4) TMI 1010 - HC - GST

Violation of principles of natural justice - failure to provide an opportunity for a personal hearing as required under Section 75(4) of the Goods and Services Tax Act 2017 - HELD THAT - Innumerable cases have come before this Court where show cause notices have been issued and ex-parte assessments made after the cancellation of the GST registration of the firm based on uploading of notices on the portal without ensuring personal service of the notices. Such conduct of the officers in dealing with matters besides resulting in huge loss of time on the part of the State Government the same unnecessarily increases burden of this Court wherein numerous petitions every day underlying violation of principles of natural justice are being filed and as violations are so glaring this Court is left with no option but to allow the petitions and remand back the matters to the authorities. The present case provides a glaring example of such conduct on the part of the officers of the State wherein besides denying opportunity of personal hearing in the show cause notice by indicating NA in the column pertaining to date of personal hearing despite specific prayer made for providing opportunity of hearing in reply the order impugned has been passed without affording any opportunity of hearing. Conclusion - Failure to provide an opportunity constitutes a violation of natural justice. The matter is remanded back to the Joint Commissioner SGST Corporate Circle-1 Ghaziabad respondent no. 2 for passing a fresh order after affording an opportunity of personal hearing to the petitioner - Petition allowed by way of remand.

Summary

ISSUES PRESENTED and CONSIDERED

The primary legal question considered by the Court was whether the order issued by the Joint Commissioner, SGST, Corporate Circle-1, Ghaziabad, demanding a tax payment from the petitioner, was valid given the procedural lapses, specifically the failure to provide an opportunity for a personal hearing as required under Section 75(4) of the Goods and Services Tax Act, 2017. The Court also examined whether the procedural errors constituted a violation of the principles of natural justice.

ISSUE-WISE DETAILED ANALYSIS

Relevant Legal Framework and Precedents

The case centered on the interpretation of Section 75(4) of the Goods and Services Tax Act, 2017, which mandates that an opportunity for a personal hearing must be provided where a written request is made by the person chargeable with tax or where an adverse decision is contemplated. The Court referred to its prior judgment in the case of Laskin Engineering Pvt. Ltd., which emphasized the necessity of adhering to procedural requirements under taxing statutes and the importance of providing a personal hearing to the assessee.

Court's Interpretation and Reasoning

The Court found that the respondent's failure to provide a personal hearing was a clear violation of Section 75(4) of the Act. The Court highlighted that the procedural law under taxing statutes requires that an opportunity for a personal hearing be given to the assessee before any adverse order is passed. The Court noted that the show cause notice issued to the petitioner indicated 'NA' in the column for the date and time of the personal hearing, and despite a specific request for a hearing, no opportunity was provided. This was deemed contrary to both the statutory provisions and the principles of natural justice.

Key Evidence and Findings

The evidence presented included the show cause notice dated 03.08.2024, which lacked a specified date for a personal hearing, and the subsequent order dated 04.02.2025, which was issued without granting a hearing. The Court also considered the circular issued by the Additional Commissioner Law, Commercial Tax, U.P., which reiterated the necessity of following procedural requirements as per the Court's previous ruling in Laskin Engineering Pvt. Ltd.

Application of Law to Facts

The Court applied Section 75(4) to the facts, concluding that the procedural lapse of not providing a personal hearing constituted a violation of the Act. The Court emphasized that such procedural requirements are fundamental to ensuring fairness and adherence to the principles of natural justice.

Treatment of Competing Arguments

The respondent's arguments focused on the merits of the tax dispute rather than addressing the procedural lapse. The Court noted that the respondent failed to provide any justification for not complying with the mandatory provisions of Section 75(4). The Court dismissed the merits-based arguments as irrelevant to the procedural issue at hand.

Conclusions

The Court concluded that the impugned order was unsustainable in law due to the violation of the principles of natural justice. The Court quashed the order and remanded the matter back to the Joint Commissioner SGST for a fresh decision, ensuring the petitioner is afforded a personal hearing.

SIGNIFICANT HOLDINGS

The Court reiterated the core principle that procedural laws under taxing statutes must be strictly adhered to, and any adverse order must be preceded by an opportunity for a personal hearing. The Court held that the failure to provide such an opportunity constitutes a violation of natural justice.

Final Determinations on Each Issue

The Court set aside the impugned order dated 04.02.2025, directing the Joint Commissioner SGST to pass a new order after providing the petitioner with a personal hearing. The Court imposed a cost of Rs. 20,000 on the Joint Commissioner for the procedural lapse, to be deposited with the High Court Legal Services Committee.

The Court also directed the Commissioner, Commercial Tax, U.P., to ensure proper training for officers to prevent future procedural lapses and suggested disciplinary proceedings against erring officials to uphold the principles of natural justice.