2023 (9) TMI 46 - HC - GST

Taxpayer Wins Challenge: GST Assessment Order Invalidated for Procedural Unfairness Under Section 75(4)

M/s Dana Pani Versus State of U.P. and Another

HC upheld petitioner's challenge to tax assessment order, finding violation of natural justice principles. The court set aside the order due to denial of ... Violation of principles of natural justice - complete denial of opportunity of oral hearing before the Assessing Authority - validity of assessment order - HELD THAT:- Once it has been laid down by way of a principle of law that a person/assessee is not required to request for 'opportunity of personal hearing' and it remained mandatory upon the Assessing Authority to afford such opportunity before passing an adverse order, the fact that the petitioner may have signified 'No' in the column meant to mark the assessee's choice to avail personal hearing, would bear no legal consequence. Even otherwise in the context of an assessment order creating heavy civil liability, observing such minimal opportunity of hearing is a must. Principle of natural justice would commend to this Court to bind the authorities to always ensure to provide such opportunity of hearing - The stand of the assessee may remain unclear unless minimal opportunity of hearing is first granted. Only thereafter, the explanation furnished may be rejected and demand created. Not only such opportunity would ensure observance of rules of natural of justice but it would allow the authority to pass appropriate and reasoned order as may serve the interest of justice and allow a better appreciation to arise at the next/appeal stage, if required. The matter is remitted to the respondent no.2/Assistant Commissioner, State Tax, Sector-1, Gorakhpur to issue a fresh notice to the petitioner within a period of two weeks from today - petition allowed by way of remand. Issues involved: Challenge to the order passed by the Assistant Commissioner for tax period 2018-19 due to denial of opportunity of oral hearing before the Assessing Authority.Summary:The petitioner challenged the order passed by the Assistant Commissioner, State Tax, for the tax period 2018-19, raising a demand in excess of Rs.19,06,242. The main contention was that the petitioner was denied the opportunity of oral hearing before the Assessing Authority. The petitioner argued that the Assessing Authority was required to afford an opportunity of personal hearing before passing an adverse assessment order, as per Section 75(4) of the U.P. GST Act, 2017. The petitioner relied on previous court decisions to support this argument.The High Court, after hearing both parties and examining the record, agreed with the petitioner's contention. The Court emphasized that the Assessing Authority must provide an opportunity of hearing even in cases of heavy civil liability to ensure the principles of natural justice are upheld. The Court noted that the impugned order was passed without granting the petitioner a proper hearing, which could lead to a lack of clarity in the assessee's stand. Therefore, the Court allowed the writ petition, set aside the order dated 23.03.2022, and remitted the matter back to the Assistant Commissioner to issue a fresh notice to the petitioner within two weeks, ensuring a fair opportunity for the petitioner to be heard before any decision is made. This would not only uphold the rules of natural justice but also facilitate the authorities in passing a reasoned order in the interest of justice.This judgment highlights the importance of providing a genuine opportunity of hearing to parties involved in tax assessments to ensure fairness and justice in the process.