Writ Allowed: s.74 UPGST Adjudication Order Quashed for Denial of Hearing, Fresh Reasoned Decision Directed

HC allowed the writ petition, holding that the adjudication order passed under s. 74 of the UPGST Act was vitiated by violation of principles of natural justice, as no valid opportunity of personal hearing had been afforded. Relying on a prior coordinate Bench decision with an identical factual matrix, the HC held that the impugned order could not be sustained and that the existence of an alternative remedy did not bar exercise of writ jurisdiction in such circumstances. The impugned order dated 16.08.2023 was quashed, and the authority was directed to permit a fresh reply, grant personal hearing, and pass a reasoned order.

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1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether the adjudication order passed under Section 74 of the Uttar Pradesh Goods and Services Tax Act, 2017, without affording a valid opportunity of personal hearing, is vitiated for violation of principles of natural justice.

1.2 Whether the existence of an alternative statutory remedy bars exercise of writ jurisdiction where the adjudication order is passed in violation of principles of natural justice and where the appellate authority lacks power of remand.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Validity of adjudication order under Section 74 passed without proper personal hearing

Interpretation and reasoning

2.1 The Court noted that the factual matrix in the present matter is "squarely covered" by a prior coordinate Bench decision in which adjudication orders had been set aside due to denial of proper opportunity of personal hearing.

2.2 In the referenced decision, it was recorded that, as per an Office Memo issued by the Commissioner, Commercial Tax, several systemic deficiencies were observed in adjudication proceedings, including: (i) mentioning "N.A." in the column for date and time of personal hearing; (ii) fixing the date of personal hearing prior to or on the same date as the last date for filing reply to the show cause notice, which was described as "non-est" and a practice to be discontinued; and (iii) passing orders on dates not commensurate with the date of personal hearing, despite the principle that the order should be passed on the date of personal hearing.

2.3 Relying on the said coordinate Bench decision, the Court reiterated that, before any adverse order is passed in an adjudication proceeding, a personal hearing must be offered to the noticee, and only if such right is waived or not availed, can the authority proceed ex parte.

2.4 On perusal of the record, the Court found that the factual situation in the present case was "very similar" to that considered in the earlier decision and saw no reason to take a different view.

Conclusions

2.5 The impugned order dated 16 August 2023 passed under Section 74 of the Uttar Pradesh Goods and Services Tax Act, 2017, having been passed without a valid and proper opportunity of personal hearing, is unsustainable and stands vitiated for gross violation of fundamental principles of natural justice.

2.6 The impugned order is quashed and set aside, and the concerned officer is directed to grant the petitioner another opportunity to file a fresh reply, thereafter fix a date of personal hearing, and pass a reasoned order, with the entire exercise to be completed within two months from the date of the Court's order.

Issue 2 - Effect of alternative remedy in the face of violation of natural justice and lack of remand power

Interpretation and reasoning

2.7 The Court adopted and applied the reasoning from the coordinate Bench decision, which held that where an impugned adjudication order is passed in gross violation of the fundamental principles of natural justice, the self-imposed bar of alternative remedy cannot be applied.

2.8 It was specifically emphasized that insisting on exhaustion of the alternative remedy in such circumstances would be of no real use and could be counter-productive to the interest of justice, particularly as the appellate authority does not have the authority to remand the proceedings.

Conclusions

2.9 The existence of an alternative statutory remedy does not preclude the exercise of writ jurisdiction where the adjudication order suffers from gross violation of natural justice and the appellate authority lacks remand powers; consequently, the writ petition was maintainable and rightly entertained.

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