2024 (3) TMI 334 - HC - GST

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

Mahaveer Trading Company Versus Deputy Commissioner State Tax And Another

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 ... Maintainability of petition - availability of remedy of appeal under Section 107 of UPGST Act - Denial of opportunity of hearing to the assessee - violation of principles of natural justice - HELD THAT:- Before any adverse order passed in an adjudication proceeding, personal hearing must be offered to the noticee. If the noticee chooses to waive that right, occasion may arise with the adjudicating authority, (in those facts), to proceed to deal with the case on merits, ex-parte. Also, another situation may exist where even after grant of such opportunity of personal hearing, the noticee fails to avail the same. Leaving such situations apart, we cannot allow a practice to arise or exist where opportunity of personal hearing may be denied to a person facing adjudication proceedings. The impugned order cannot be sustained in the eyes of law. It has been passed in gross violation of fundamental principles of natural justice. The self imposed bar of alternative remedy cannot be applied in such facts. If applied, it would be of no real use. In fact, it would be counter productive to the interest of justice. Here, it may be noted, the appeal authority does not have the authority to remand the proceedings. The impugned order dated 9.11.2023 passed by the respondent no.1 - Deputy Commissioner, State Tax, Ghaziabad is, hereby, set-aside - Petition allowed. 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.