Interpreting "Or": The Disjunctive Mandate for Personal Hearing in Tax Matters

A Critique of the Judgement on Personal Hearing under UPGST Act

Reported as:

2024 (3) TMI 49 - ALLAHABAD HIGH COURT

Introduction

The recent judgement by the High Court (HC) has shed light on a crucial aspect of the Uttar Pradesh Goods and Services Tax (UPGST) Act, 2017 - the mandatory requirement of providing an opportunity for personal hearing before imposing tax or penalty. The court's decision underscores the significance of upholding the principles of natural justice and fair procedure, even in administrative actions that may result in civil consequences.

Arguments Presented

The petitioner, a hotel owner registered under the UPGST Act, challenged the orders passed by the respondent authorities, alleging a violation of the principles of natural justice. The crux of the matter revolved around Section 75(4) of the UPGST Act, which states:

"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."

The petitioner contended that despite the mandatory requirement u/s 75(4), the respondent authorities failed to afford an opportunity for personal hearing before imposing tax and penalty.

Discussions and Findings of the Court

Interpretation of the Word "Or"

The court delved into the interpretation of the word "or" used in Section 75(4) of the UPGST Act. Emphasizing the disjunctive nature of the word, the court highlighted that "or" offers alternative paths or options, accommodating diverse individual needs and situations. The court stressed the importance of adhering to the plain and ordinary meaning of the language used in statutes, as per the principles of statutory interpretation.

Significance of Personal Hearing

The court underscored the pivotal role of personal hearing in upholding procedural fairness and natural justice. It acknowledged that personal hearing provides individuals with an opportunity to present their case, respond to allegations, and address mitigating factors directly to the decision-maker. This safeguard against arbitrary or unjust decisions becomes particularly crucial in matters concerning rights, benefits, and entitlements.

Reliance on Precedents

The court drew upon several precedents from the Supreme Court and High Court decisions to reinforce its stance. Notably, the court relied on the judgement in M/s. Dharampal Satyapal Ltd. Versus Deputy Commissioner of Central Excise, Gauhati & Others - 2015 (5) TMI 500 - Supreme Court, where the Supreme Court upheld the importance of personal hearing even in administrative actions with civil consequences.

Analysis and Decision by the Court

After a comprehensive analysis, the court concluded that the respondent authorities had violated the statutory obligation u/s 75(4) of the UPGST Act by failing to afford an opportunity for personal hearing to the petitioner. Consequently, the court issued a writ of certiorari, quashing the orders passed by the respondent authorities.

The court directed the respondent authorities to grant an opportunity for personal hearing to the petitioner and pass a reasoned order in accordance with the law within two months.

Conclusion

The judgement reinforces the significance of adhering to the principles of natural justice and fair procedure in administrative actions, particularly those involving tax imposition or penalty. It serves as a reminder that even in the realm of taxation, individual rights and due process must be safeguarded. The court's emphasis on interpreting statutory provisions based on their plain and ordinary meaning provides guidance for future cases involving statutory interpretation.

Full Text:

2024 (3) TMI 49 - ALLAHABAD HIGH COURT