2023 (6) TMI 531 - HC - GST

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 ... Opportunity of hearing - principle of natural justice - mandatory personal hearing before adverse assessment - interpretation of Section 75(4) of the U.P. GST Act, 2017 - remand for fresh hearingOpportunity of hearing - interpretation of Section 75(4) of the U.P. GST Act, 2017 - mandatory personal hearing before adverse assessment - principle of natural justice - Whether an assessee can be denied opportunity of personal hearing before an adverse assessment order where the show-cause notice record indicates 'NA' for personal hearing and the assessee had indicated 'No' in the online reply. - HELD THAT: - The Court construed Section 75(4) of the U.P. GST Act, 2017 to mean that an opportunity of hearing must be granted where an adverse decision is contemplated, and that the Assessing Authority is obliged to afford such opportunity even if the assessee did not separately request it. The coordinate-bench decision in Bharat Mint & Allied Chemicals was followed. The mere marking of 'No' by the assessee in an online form or the notation 'NA' against personal hearing in the notice does not relieve the authority of its duty to provide a real and meaningful opportunity of hearing before creating a substantial civil liability. Observance of this minimal opportunity is necessary both to satisfy the rules of natural justice and to enable the authority to pass a reasoned order which would facilitate proper appreciation on appeal. [Paras 6, 7, 8, 9]The Assessing Authority was required to afford an opportunity of personal hearing before passing the adverse assessment order; absence of such hearing rendered the order contrary to law.Remand for fresh hearing - mandatory personal hearing before adverse assessment - Remedial step to be taken in view of the deficiency of hearing prior to the adverse order. - HELD THAT: - Because the impugned assessment order was passed without affording the mandatory personal hearing, the Court set aside the order and remitted the matter to the Assistant Commissioner for fresh proceedings. The authority was directed to issue a fresh notice within two weeks and afford the petitioner an opportunity to be heard; the petitioner undertook to appear on the next date fixed to enable expeditious conclusion of proceedings. [Paras 10]Impugned order set aside and matter remitted for fresh notice and hearing; directions issued for timely compliance.Final Conclusion: Writ petition allowed; the assessment order dated 25.11.2022 is set aside for failure to afford a mandatory personal hearing under Section 75(4) of the U.P. GST Act, 2017, and the matter is remitted to the Assistant Commissioner to issue fresh notice within two weeks and conclude the proceedings after granting the petitioner a real opportunity of hearing. 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.