2023 (10) TMI 943 - HC - GST

Tax Demand Order Quashed: Procedural Fairness Violated, Deputy Commissioner Directed to Provide Proper Hearing Under Section 75(4)

M/s S.A. Traders, Lko. Thru. Its Proprietor Sanjay Agarwal Versus State of U.P. Thru. Prin. Secy. (Institutional Finance) U.P. Govt. Lko. And Another

HC allowed the writ petition challenging a tax demand order. The court found that the Deputy Commissioner violated procedural fairness by denying the ... Principles of natural justice - denial of opportunity of oral hearing before the Assessing Authority - 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. It has to be ensured that such opportunity is granted in real terms. The matter is remitted to the respondent no.2/Deputy Commissioner, State Tax, Sector-17, Lucknow to issue a fresh notice to the petitioner within a period of two weeks from today - Petition allowed by way of remand. Issues: Challenge to order passed by Deputy Commissioner for excess tax demand; Denial of opportunity of oral hearing to petitioner.Challenge to Order Passed by Deputy Commissioner:The petitioner challenged the order passed by the Deputy Commissioner, State Tax, Lucknow, raising a demand in excess of Rs. 65,284,344 for the tax period 2021-22. The main contention was that the petitioner was denied the opportunity of oral hearing before the Assessing Authority, which is a violation of Section 75(4) of the U.P. GST Act, 2017. The petitioner argued that the assessment order was adverse and raised a disputed tax demand of about Rs. 19 lacs without affording the necessary opportunity of hearing as mandated by law.Denial of Opportunity of Oral Hearing:The petitioner's counsel pointed out that the notice issued to the petitioner on 20.03.2023 did not provide any opportunity for a personal hearing, as indicated by 'NA' against the relevant columns. Citing the interpretation of Section 75(4) of the Act by a coordinate bench in a previous case, it was argued that the Assessing Authority was obligated to grant a personal hearing before making an adverse assessment order. The court concurred with this view, emphasizing that the petitioner should not have been required to request a personal hearing and that it was mandatory for the Assessing Authority to provide such an opportunity.The court stressed the importance of affording a genuine opportunity of hearing, especially in cases involving significant civil liabilities. Upholding the principles of natural justice, the court held that the authorities must always ensure the provision of such an opportunity to the concerned party. It was noted that the impugned order was passed without granting the petitioner a proper hearing, which could lead to ambiguity in the assessee's stand. Providing a fair hearing not only upholds natural justice but also enables the authority to pass a well-reasoned order, serving the interests of justice and facilitating better outcomes at subsequent stages, including appeals.In conclusion, the writ petition was allowed, setting aside the order dated 05.07.2023. The matter was remitted back to the Deputy Commissioner, State Tax, Lucknow, with directions to issue a fresh notice to the petitioner within two weeks, ensuring that the petitioner is given a proper opportunity for a hearing before concluding the proceedings promptly.