Personal hearing rights in tax assessment: disjunctive reading of 'or' requires hearings before adverse administrative tax decisions; orders quashed.

Failure to afford a personal hearing while issuing tax assessment notices breached principles of natural justice; the statutory phrase 'or' in the provision governing hearings must be read disjunctively to permit a hearing either on request or whenever an adverse decision is contemplated, not cumulatively. Personal hearing is mandatory in administrative actions with civil consequences to ensure procedural fairness, and absence of such hearing vitiates the impugned assessment. Consequentially, the impugned assessment orders were quashed and the matter remitted for a fresh, reasoned decision after affording a personal hearing within a fixed period.

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Issues Involved:
1. Violation of principles of natural justice.
2. Interpretation of statutory language, specifically the word "or" in Section 75(4) of the UPGST Act, 2017.
3. Necessity of personal hearing in administrative decisions impacting civil consequences.

Summary:

1. Violation of Principles of Natural Justice:
The petitioner, owner of a hotel registered under the UPGST Act, 2017, was issued a notice on 25.03.2021 for the period December 2017 under Section 74 of the UPGST Act. The petitioner failed to reply, leading to an order under Section 74(9) on 07.07.2021 and issuance of DRC 07 on 13.07.2021. The petitioner contended that no date, time, or venue for a personal hearing was fixed, violating principles of natural justice. The appeal before the Additional Commissioner (Respondent No. 3) partially succeeded, deleting the supply estimated for catering but upholding the levy based on seized documents. The court emphasized that an opportunity for personal hearing is a mandatory requirement under Section 75(4) of the UPGST Act, 2017, which was not provided, thus violating natural justice principles.

2. Interpretation of Statutory Language:
The court highlighted the disjunctive nature of the word "or" in Section 75(4) of the UPGST Act, 2017, emphasizing its role in providing alternatives rather than cumulative conditions. The word "or" allows for flexibility, mandating a personal hearing either upon request or when an adverse decision is contemplated. This interpretation aligns with the principle of giving effect to the plain and ordinary meaning of statutory language, as upheld in Commissioner of Sales Tax, Uttar Pradesh v. The Modi Sugar Mills Ltd. The court reiterated that interpreting "or" as "and" would impose stricter conditions than intended, leading to unreasonable outcomes.

3. Necessity of Personal Hearing:
The court underscored the importance of personal hearing in ensuring procedural fairness and preventing arbitrary decisions. Citing Bharat Mint and Allied Chemicals v. Commissioner Commercial Tax and Others and Mohini Traders v. State of U.P. and Others, the court affirmed that personal hearing is mandatory even if not explicitly requested by the assessee. This principle was further supported by the Supreme Court in Dharampal Satyapal Limited v. Deputy Commissioner of Central Excise, Guhati and Others, emphasizing that personal hearing is necessary in administrative actions with civil consequences. The court concluded that the failure to provide a personal hearing in the present case constituted a gross violation of natural justice principles.

Conclusion:
The court issued a writ of certiorari, quashing the orders dated 07.07.2021 and 16.12.2022, and directed the Respondent No. 2 to grant an opportunity for personal hearing to the petitioner and pass a reasoned order within two months. The writ petition was allowed, ensuring adherence to principles of natural justice and statutory mandates.

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