Adjudication order set aside for denying personal hearing opportunity violating natural justice principles under Section 107 UPGST Act

The HC set aside an adjudication order dated 9.11.2023 passed by Deputy Commissioner, State Tax, finding it violated principles of natural justice by denying personal hearing opportunity to the assessee. The court held that before any adverse order in adjudication proceedings, personal hearing must be offered to the noticee, except where the right is waived or the noticee fails to avail granted opportunity. The court ruled that alternative remedy under Section 107 of UPGST Act was not applicable as the appeal authority lacked remand powers, making such remedy ineffective. The petition was allowed and the impugned order was set aside.

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Issues involved:
Challenge to order under Section 74 read with Section 122 of the Uttar Pradesh Goods and Services Tax Act, 2017. Availability of remedy of appeal under Section 107 of the Act. Violation of Section 75(4) of the Act regarding opportunity of personal hearing.

Challenge to Order under Section 74:
The petitioner challenged the order passed by the Deputy Commissioner, State Tax, Ghaziabad under Section 74 of the Act. The challenge was based on the violation of procedural law under taxing statutes, specifically regarding the denial of opportunity of personal hearing to the assessee. The court found it unacceptable that the revenue authorities failed to provide the mandatory opportunity of hearing as required under Section 75(4) of the Act.

Availability of Remedy of Appeal under Section 107:
The Additional Chief Standing Counsel raised a preliminary objection regarding the availability of the remedy of appeal under Section 107 of the Act. The objection was countered by the petitioner's counsel citing the violation of Section 75(4) of the Act, emphasizing the importance of providing an opportunity of hearing to the person chargeable with tax or penalty.

Violation of Section 75(4) - Opportunity of Personal Hearing:
Section 75(4) of the Act mandates that an opportunity of hearing must be granted when a request is received in writing from the person chargeable with tax or penalty, or when any adverse decision is contemplated against such person. The court noted that the petitioner had appeared before the competent authority on three dates and submitted replies to the show-cause notices issued. However, the adjudicating authority failed to grant any further opportunity of personal hearing before passing the order.

Judgment and Directions:
The court found that the impugned order was passed in gross violation of fundamental principles of natural justice by denying the petitioner an opportunity of hearing. The self-imposed bar of alternative remedy was deemed counterproductive to the interest of justice in this case. The writ petition was allowed, setting aside the impugned order and remitting the matter back to the Deputy Commissioner to pass a fresh order after affording due opportunity of hearing to the petitioner. The court directed the Commissioner, Commercial Tax, Uttar Pradesh to undertake remedial measures to prevent similar violations in the future, including disciplinary proceedings against erring officials.

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