GST assessment demand raised without personal hearing u/s75(4); order set aside and reassessment directed after fresh notice.

The dominant issue was violation of natural justice under s.75(4) of the U.P. GST Act, 2017 due to denial of a personal hearing before an adverse assessment creating substantial civil liability. The HC held that the assessing authority is mandatorily required to afford an effective oral hearing before rejecting the reply and raising demand; the assessee need not specifically request such hearing, and an indication of "No" in a hearing option column has no legal consequence. As the reply to the show-cause notice was considered shortly before the order, the assessee's stand could not be treated as clarified without a real hearing. The impugned assessment order was set aside and the matter remitted for fresh notice within two weeks.

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Issues Involved:
Challenge to the order dated 21.10.2022 passed by the Assistant Commissioner, State Tax, Sector-6, Aligarh for the tax period April 2018, raising demand in excess of Rs. 5 crores against the petitioner.


Summary:
The petitioner raised a challenge in the present petition regarding the denial of an opportunity for oral hearing before the Assessing Authority, as the only notice issued did not provide for a personal hearing. The petitioner argued that as per Section 75(4) of the U.P. GST Act, 2017, the Assessing Authority was obligated to grant a personal hearing before passing an adverse assessment order, citing relevant case laws. On the contrary, the revenue contended that the petitioner had declined the opportunity for a personal hearing by marking 'No' in the reply to the show-cause notice submitted online. After hearing both parties and examining the law, the Court found that the petitioner's choice to decline a personal hearing did not absolve the Authority from providing such an opportunity as mandated by law. The Court emphasized that in cases involving significant civil liability, ensuring a fair opportunity of hearing is essential to uphold the principles of natural justice and enable the Authority to make informed decisions. Therefore, the Court allowed the writ petition, set aside the impugned order, and directed the matter to be remitted to the Assistant Commissioner for issuing a fresh notice to the petitioner with a requirement to provide a genuine opportunity for a hearing.

The judgment highlighted the importance of affording a fair opportunity of hearing to a person chargeable with tax or penalty before an adverse decision is made, as mandated by Section 75(4) of the U.P. GST Act, 2017. The Court endorsed the principle established in a previous case, emphasizing that the Authority must grant a personal hearing even if the assessee had initially declined the opportunity, especially in cases involving substantial financial implications. The Court stressed that ensuring a genuine opportunity for a hearing is crucial not only for upholding natural justice but also for facilitating reasoned decision-making that serves the interests of justice and allows for better outcomes in subsequent stages of the legal process, such as appeals. The judgment underscored the significance of providing adequate opportunities for hearing to maintain fairness and justice in tax assessment proceedings.

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