2024 (1) TMI 625 - HC - GST

GST Orders Invalidated: Systematic Hearing Violations Expose Procedural Flaws in Tax Assessment Process Under Section 75(4)

M/s Primeone Work Force Pvt. Ltd. Thru. Its Auth. Signatory Alok Kumar Versus Union Of India Thru. Secy. Ministry Of Finance (Deptt. Of Revenue) New Delhi And Others

HC allowed four writ petitions challenging GST orders across financial years 2019-20 to 2022-23. The court found systematic violations of Section 75(4) of ... Violation of principles of natural justice - opportunity of hearing was not provided - HELD THAT:- Since in the present cases, both tax and penalty are imposed against the petitioners and admittedly, an adverse decision is contemplated against the petitioners, therefore, under Section 75(4) of the Act of 2017, an opportunity of hearing was mandatorily required to be given by the department to the petitioners and merely marking the same as 'NO' in the option cannot entitle the department to pass an order without giving any opportunity or even without waiting for the petitioners to appear on the date fixed. This Court has already taken a similar view in M/S MOHINI TRADERS VERSUS STATE OF U.P. AND ANOTHER [2023 (6) TMI 531 - ALLAHABAD HIGH COURT]. All the writ petitions are allowed on the sole ground of opportunity of hearing and the orders impugned in all four writ petitions are quashed. Issues involved: The judgment pertains to four writ petitions challenging orders and show cause notices related to the Financial Years 2019-20, 2020-21, 2021-22, and 2022-23 respectively. The main issue revolves around the violation of the opportunity of hearing as mandated by Section 75(4) of the U.P. GST Act, 2017.Financial Year 2020-21:The petitioners challenged orders and show cause notices issued in relation to this financial year. The petitioners had replied to the show cause notice but mistakenly marked 'NO' for the opportunity of hearing due to a technical glitch. The counsel argued that Section 75(4) of the U.P. GST Act, 2017 necessitates an opportunity of hearing, which was not provided in this case. The court noted that the orders were passed before the scheduled hearing date, thereby denying the petitioners their right to be heard.Financial Year 2022-23:Similar to the previous case, the petitioners contested orders and show cause notices for this financial year. The court emphasized that since both tax and penalty were imposed against the petitioners, an adverse decision was contemplated, requiring an opportunity of hearing as per Section 75(4) of the Act. The court referred to a previous judgment and ruled that marking 'NO' for the opportunity of hearing does not authorize the department to proceed without granting a hearing.Financial Year 2021-22:The petitioners challenged orders and show cause notices related to this financial year. The court reiterated the mandatory nature of providing an opportunity of hearing under Section 75(4) of the U.P. GST Act, 2017 when an adverse decision is contemplated. Emphasizing the importance of due process, the court held that orders passed without affording the petitioners a hearing are invalid.Financial Year 2019-20:In this case, the petitioners contested orders and show cause notices issued for the financial year 2019-20. The court reiterated that the department must grant an opportunity of hearing as per the statutory provision, especially when an adverse decision is anticipated. The court allowed the writ petitions solely on the ground of the lack of opportunity of hearing and quashed the impugned orders.Conclusion:The High Court allowed all four writ petitions on the basis of the denial of the opportunity of hearing to the petitioners. The court directed the department to provide a fresh opportunity of hearing based on the replies already submitted by the petitioners and to pass a new order in compliance with the law. Additionally, the court left other issues raised in the writ petitions to be decided at a later stage.