2024 (1) TMI 807 - HC - GST

Assessment u/s 73 quashed for violating Section 75(4) hearing mandate; writ under Article 226 allowed

HC held that the impugned assessment order under Section 73 of the WBGST/CGST Acts was vitiated for breach of principles of natural justice, as no show ... Opportunity of hearing - principles of natural justice - Section 75(4) of the WBGST/CGST Act, 2017 - order under Section 73 - alternative statutory remedy / availability of alternative remedy - quashing and remand for fresh hearingOpportunity of hearing - Section 75(4) of the WBGST/CGST Act, 2017 - order under Section 73 - principles of natural justice - Validity of the assessment order dated 25.03.2021 under Section 73 for April 2018 to March 2019 in absence of an opportunity of hearing as mandated by Section 75(4). - HELD THAT: - The show cause notice dated 15.01.2021 did not specify any date, time or venue for personal hearing and thus did not afford the petitioner the opportunity of hearing contemplated by Section 75(4). Section 75(4) mandates that where an adverse decision is contemplated the authority must grant an opportunity of hearing, and therefore an order under Section 73 passed without affording such opportunity is in breach of the statutory mandate and principles of natural justice. On this basis the impugned order for the period April 2018 to March 2019 cannot be sustained and requires quashing and remand for fresh consideration after affording a reasonable opportunity of personal hearing. [Paras 7, 9, 11, 15]Impugned order dated 25.03.2021 under Section 73 for April 2018 to March 2019 quashed; matter remitted for fresh decision after affording reasonable opportunity of personal hearing.Alternative statutory remedy / availability of alternative remedy - quashing and remand for fresh hearing - Whether existence of a statutory appeal remedy under Section 107 barred exercise of writ jurisdiction where the order was passed in breach of Section 75(4). - HELD THAT: - Although an appeal under Section 107 exists, the Court held that availability of an alternative remedy does not operate as a complete bar to writ jurisdiction where the impugned order is passed in total violation of a statutory procedural mandate or principles of natural justice. The Court relied on established exceptions to the rule of alternative remedy and concluded that in the present facts-an order passed without the mandatory opportunity of hearing-the High Court may entertain and grant relief under Article 226. [Paras 12, 13, 15]Objection based on availability of statutory appeal under Section 107 rejected; writ remedy entertained due to breach of statutory procedure, and relief granted.Final Conclusion: The impugned order dated 25.03.2021 for the period April 2018 to March 2019 is quashed; the writ appeal is allowed and the matter is remitted to the Assistant Commissioner of State Tax (GST), Jalpaiguri charge to pass a fresh order under Section 73 after affording a reasonable opportunity of personal hearing to the petitioner; petitioner to file reply to the show cause notice within three weeks. 1. ISSUES PRESENTED AND CONSIDERED 1. Whether an assessment/order under Section 73 of the WBGST/CGST Act, 2017 passed without fixing or communicating any date, time or venue for personal hearing violates Section 75(4) and principles of natural justice. 2. Whether Section 75(4) of the WBGST/CGST Act, 2017 mandates an opportunity of hearing where an adverse decision is contemplated, even if no written request for hearing is made by the person chargeable with tax or penalty. 3. Whether the existence of an alternative statutory remedy (appeal under Section 107) bars exercise of writ jurisdiction under Article 226 where the impugned order is passed in complete breach of the statutory procedure/natural justice. 4. Remedy: Whether the appropriate relief on such violation is quashing of the impugned order and remand for fresh decision after affording a reasonable opportunity of personal hearing. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Validity of an assessment under Section 73 passed without communicating date/time/venue for hearing Legal framework: Section 73 authorises assessment for tax not paid or short paid; Section 75(4) mandates that 'An opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person.' Precedent Treatment: Cited High Court authority (Allahabad) construed Section 75(4) to require personal hearing where an adverse decision is contemplated and noted that omission to mention date/time/venue rendered proceedings vitiated. Interpretation and reasoning: The show cause notice here contained language inviting appearance 'on the date, time and venue' but omitted to specify any such particulars. The Court treated that omission as a denial of the mandated opportunity of hearing because Section 75(4) imposes a duty on the authority to afford hearing when an adverse decision is contemplated; mere invitation without particulars is insufficient. The absence of communicated hearing particulars meant the proper officer did not afford a hearing before passing the adverse assessment. Ratio vs. Obiter: Ratio - Where an adverse decision is contemplated under the GST scheme, the authority must grant an opportunity of hearing by communicating date/time/venue; failure to do so vitiates the resulting order. Obiter - Observations on the specific wording of the particular show cause notice (invitation language) are supportive but subordinate to the statutory mandate. Conclusion: The assessment order under Section 73 passed without fixing or communicating hearing particulars violated Section 75(4) and principles of natural justice and therefore cannot be sustained. Issue 2: Mandate of Section 75(4) - requirement of hearing even absent a written request Legal framework: Text of Section 75(4) provides alternative bases for hearing - upon written request or where an adverse decision is contemplated. Precedent Treatment: The Bench relied on the Allahabad High Court's interpretation and analysed settled principles delineating that where an adverse decision is contemplated, hearing is mandatory irrespective of any written request by the assessee. Interpretation and reasoning: The Court emphasised the conjunctive construction of Section 75(4): the clause 'or where any adverse decision is contemplated' creates an independent obligation to afford an opportunity of hearing. Thus, the authority cannot circumvent the duty to hear by relying upon absence of a written request; statutory duty attaches once an adverse conclusion is in contemplation. Ratio vs. Obiter: Ratio - Section 75(4) requires hearing when an adverse decision is contemplated, independent of any written request; failure to comply nullifies the order. Obiter - Comparative remarks on administrative practices and potential mechanistic notices are ancillary. Conclusion: Section 75(4) mandates grant of opportunity of hearing where an adverse decision is contemplated; absence of a hearing in such circumstances renders the impugned order invalid. Issue 3: Availability of alternative statutory remedy (appeal under Section 107) and exercise of writ jurisdiction Legal framework: Article 226 vests discretionary writ jurisdiction in High Courts; doctrine of alternative remedy ordinarily weighs against exercise of that jurisdiction unless exceptional circumstances exist. Precedent Treatment: The Court relied on an established line of Supreme Court authorities identifying exceptions where writ relief is maintainable despite alternative remedies - including total violation of principles of natural justice, lack of jurisdiction, and where required procedure was not adopted. Interpretation and reasoning: The Court reasoned that an order passed in 'complete breach' of the statutory mandate (Section 75(4)) and of natural justice constitutes one of the recognised exceptions to the rule of alternative remedy. Given the absence of any hearing where an adverse decision was contemplated, the statutory appeal route did not preclude writ relief because the underlying order was tainted by procedural illegality. Ratio vs. Obiter: Ratio - Alternative remedy is not an absolute bar to writ jurisdiction where the impugned order has been passed in total violation of statutory procedure or principles of natural justice (enumerated exceptions). Obiter - Enumerated list of exceptions drawn from prior decisions serves as guidance rather than novel doctrine. Conclusion: The existence of an appeal under Section 107 did not bar exercise of writ jurisdiction in the present facts because the impugned order was passed in complete breach of Section 75(4) and natural justice; writ relief was therefore appropriate. Issue 4: Appropriate relief - quashing and remand for fresh decision after hearing Legal framework: Where a quasi-judicial or administrative order is vitiated by breach of statutory procedure or natural justice, the usual relief is quashing of the order and remand for fresh consideration after compliance with the required procedure. Precedent Treatment: The Court applied settled remedial principles and directed fresh decision-making consistent with statutory mandates and fair hearing requirements. Interpretation and reasoning: Because the impugned Section 73 order was issued without affording a hearing, the only effective and proportionate remedy was to set aside the order and remit the matter to the proper officer to decide afresh under Section 73 after affording a reasonable opportunity of personal hearing. The Court gave a limited, practical direction (time for filing reply) to facilitate fresh proceedings. Ratio vs. Obiter: Ratio - Quashment of the defective order and remand for fresh adjudication after affording the statutorily mandated opportunity of hearing is the appropriate relief where Section 75(4) has been breached. Obiter - Specific timelines for compliance in this case are case-management directions. Conclusion: The impugned order was quashed and the matter remitted to the assessing authority to pass a fresh order under Section 73 after affording a reasonable opportunity of personal hearing; limited directions were issued regarding submission of reply.