Tax Authority Fails to Provide Fair Hearing, HC Quashes Order and Mandates Proper Procedural Compliance Under Section 75

HC found a procedural violation in tax proceedings where mandatory hearing requirements under Section 75 of CGST Act, 2017 were not properly followed. Despite petitioner submitting explanation, the court determined no genuine opportunity for personal hearing was provided. HC allowed the writ petition, set aside the impugned order, and directed authorities to issue a fresh order after ensuring proper hearing for the petitioner.

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Issues: Violation of principles of natural justice and mandatory requirements of law in passing the impugned order

In the present case, the Assistant Commissioner (State Tax) issued a show-cause notice to the petitioner, who duly filed an explanation in response. The petitioner contended that the impugned order was passed in contravention of the mandatory requirements of law under sub-section (4) of Section 75 of the Central Goods and Service Tax Act, 2017, and in violation of principles of natural justice. On the other hand, the Assistant Government Pleader argued that since the petitioner had submitted an explanation in response to the show-cause notice, there was no violation of natural justice or legal requirements.

Analysis and Decision:

The Court examined Section 75 of the Act, 2017, which mandates granting an opportunity of hearing where a request is received from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person. The impugned order revealed that the petitioner had requested a personal hearing, and a reference was made to a notice allegedly providing an opportunity for a personal hearing. However, it was found that the reference in the order was merely an authorization issued by the Joint Commissioner, not the actual notice for a personal hearing. This discrepancy led the Court to conclude that the impugned order was passed in violation of both the mandatory provisions of the law and the principles of natural justice.

Outcome:

As a result, the Court allowed the Writ Petition, setting aside the impugned order dated 18.11.2022. The authorities were directed to pass a fresh order after affording the petitioner a proper hearing. No costs were awarded in this matter, and any pending miscellaneous petitions were ordered to be closed.

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