Natural justice in GST assessment proceedings: rejection of a bona fide adjournment request vitiated the orders and required fresh hearing.

Assessment and rectification orders under the Uttar Pradesh Goods and Services Tax Act, 2017 were quashed for breach of natural justice where the authority rejected a bona fide first adjournment request and determined tax liability without giving a fair opportunity to reply or a proper hearing. The HC held that an assessment made in such circumstances is vitiated because reasonable opportunity of hearing is a mandatory requirement before adverse determination. The matter was remitted for fresh adjudication after granting the petitioner reasonable time and an effective opportunity to be heard.

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Issues: Whether the assessment and rectification orders passed under the Uttar Pradesh Goods and Services Tax Act, 2017 were liable to be quashed for breach of principles of natural justice, and whether the matter should be remitted for fresh adjudication after granting reasonable opportunity of hearing.

Analysis: The petitioner had sought time by way of a first adjournment application in response to the notice issued for an alleged unverified transaction. The adjournment request was not found false or untenable, yet it was rejected and the tax liability was determined. In these circumstances, the orders were passed without granting a fair and reasonable opportunity to submit a reply and without affording a proper hearing. Such disposal of the proceedings amounted to a gross breach of natural justice.

Conclusion: The assessment order under Section 74 of the Uttar Pradesh Goods and Services Tax Act, 2017 and the rectification order under Section 161 of the Uttar Pradesh Goods and Services Tax Act, 2017 were quashed, and the matter was remitted for fresh decision after giving reasonable time and opportunity of hearing to the petitioner.

Ratio Decidendi: An assessment order passed without affording reasonable opportunity to respond, especially after an unreasoned rejection of a bona fide adjournment request, is vitiated for breach of natural justice and cannot be sustained.

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