2023 (5) TMI 1182 - HC - GST

Tax Order Quashed: Procedural Fairness Prevails, Section 75(4) Violation Leads to Order Reversal and Rehearing

The HC allowed the writ petition challenging a tax order under CGST/UPGST Act. The court found a breach of natural justice due to lack of proper personal ... Opportunity of personal hearing under Section 75(4) - principle of natural justice - alternative remedy not a bar where opportunity of hearing is denied - remittal for fresh adjudication after affording personal hearingOpportunity of personal hearing under Section 75(4) - principle of natural justice - Impugned adjudication passed without affording the personal hearing shown as contemplated in the show cause notice is not sustainable. - HELD THAT: - The show cause notice expressly contemplated a personal hearing by stating that the person may appear for personal hearing, but the table titled 'Details of personal hearing etc.' recorded 'NA' against Date, Time and Venue, indicating no hearing was in fact afforded. Section 75(4) requires opportunity of hearing where an adverse decision is contemplated; accordingly, denial of such hearing violates the principles of natural justice. The Court followed the reasoning in the co ordinate Bench decision of Bharat Mint & Allied Chemicals and rejected the contention that availability of an alternative remedy (appeal) precludes interference: where due opportunity of hearing as required by law has not been afforded, the remedy by way of writ petition under Article 226 is maintainable.Impugned order quashed and the matter remitted to the Deputy Commissioner, Audit Wing, Jabalpur for fresh adjudication after affording personal hearing to the petitioner.Final Conclusion: Writ petition allowed; impugned order set aside and matter remitted for fresh decision after giving the petitioner the personal hearing required by law; no order as to costs. Issues involved: Challenge to order under section 74 of MPSGST/CGST Act, 2017 and section 20 of IGST Act, 2017 for upholding tax, interest, and penalty without affording personal hearing as required by law.Issue 1: Opportunity of personal hearing under Section 75(4) of the ActThe petitioner challenged the order dated 24.08.2022 passed under section 74 of the Act, contending that personal hearing was necessary before passing the order, as mandated by Section 75(4) of the Act. The petitioner argued that the show cause notice lacked details of personal hearing, rendering the subsequent order unsustainable. Citing the Allahabad High Court decision in Bharat Mint & Allied Chemicals Vs. Commissioner of Commercial Tax, the petitioner emphasized the mandatory nature of personal hearing under the Act.Issue 2: Breach of natural justice and quashing of adjudication orderThe key questions before the court were whether personal hearing is mandatory under Section 75(4) of the CGST/UPGST Act, 2017, and whether the impugned order breached the principle of natural justice. The court noted that the show cause notice did not specify the date, time, and venue for personal hearing, as required by the Act. Section 75(4) mandates granting an opportunity of hearing where an adverse decision is contemplated, without the need for a specific request. The court held that the absence of a proper personal hearing rendered the impugned order unsustainable and in violation of natural justice principles.Conclusion:The court found that the impugned order lacked a proper personal hearing, as required by law, and therefore quashed the order. The matter was remitted back to the Deputy Commissioner for a fresh order after affording the petitioner a proper personal hearing. The court emphasized that the availability of an alternative remedy of appeal does not preclude the exercise of jurisdiction under Article 226 when there is a failure to adhere to the principles of natural justice. The writ petition was allowed, with no costs awarded, and any interim applications were disposed of accordingly.