Assessment order quashed for violating Section 75(4) UP GST Act and denying personal hearing, writ petition allowed
HC held the assessment order unsustainable for breach of Section 75(4) UP GST Act and violation of principles of natural justice. The authority issued notice on 28.06.2023 fixing 28.07.2023 for filing reply but did not fix any specific hearing date and subsequently passed the ex parte order on 18.08.2023 without affording a further opportunity of personal hearing. Treating this as a material procedural illegality vitiating the proceedings, HC set aside the impugned order of the Deputy Commissioner, State Tax, and allowed the writ petition.
1. ISSUES PRESENTED AND CONSIDERED
1.1 Whether the writ petition under Article 226 was maintainable despite the availability of a statutory appeal under Section 107 of the UPGST Act, 2017, in view of alleged violation of Section 75(4) and principles of natural justice.
1.2 Whether an order passed under Section 74 of the UPGST Act, 2017, without affording a specific opportunity of personal hearing after filing of reply to the show cause notice, is vitiated for non-compliance of Section 75(4) and principles of natural justice.
2. ISSUE-WISE DETAILED ANALYSIS
Issue 1: Maintainability of writ petition despite alternative remedy under Section 107 of the UPGST Act, 2017
Legal framework
2.1 The Court considered Section 107 of the UPGST Act, 2017 (statutory appeal) and Section 75(4) of the Act, which mandates: "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."
Interpretation and reasoning
2.2 The respondents raised a preliminary objection of alternative remedy by way of appeal under Section 107.
2.3 The petitioner met that objection by asserting violation of Section 75(4) and denial of opportunity of personal hearing, thereby alleging breach of fundamental principles of natural justice.
2.4 The Court relied on its earlier decision in Writ Tax No. 303 of 2024, where it had held that: (i) opportunity of personal hearing before passing any assessment/adjudication order is basic to procedural law under taxing statutes; (ii) denial of such opportunity amounts to gross violation of natural justice; and (iii) in such circumstances, the "self imposed bar of alternative remedy cannot be applied" as it would be of no real use and would be counter-productive to the interest of justice, especially when the appellate authority has no power to remand the matter.
Conclusions
2.5 The existence of an alternative remedy under Section 107 did not bar exercise of writ jurisdiction where the impugned order was passed in violation of Section 75(4) and fundamental principles of natural justice.
2.6 The writ petition was held maintainable and the preliminary objection of the respondents was rejected.
Issue 2: Validity of the order under Section 74 passed without specific personal hearing after reply to show cause notice
Legal framework
2.7 The Court examined Section 75(4) of the UPGST Act, 2017, quoted in extenso, and the general requirement of providing an opportunity of personal hearing before passing an adverse adjudication order.
2.8 The Court referred to its reasoning in Writ Tax No. 303 of 2024, emphasizing that opportunity of personal hearing is a mandatory procedural requirement and that denial thereof constitutes violation of natural justice.
2.9 The Court also took note of Office Memo No. 1406 dated 12.11.2024 issued by the Commissioner, Commercial Tax, Uttar Pradesh, which highlighted systemic deficiencies in fixing dates of personal hearing, synchronizing them with dates of reply to show cause notices, and the requirement that the date of order should be commensurate with the date of personal hearing.
Interpretation and reasoning
2.10 In the earlier decision (followed in the present case), the Court found that the assessee had appeared and filed replies on multiple dates in response to show cause notices, but no separate notice or opportunity of oral/personal hearing was given, and the adjudicating authority proceeded to pass a merit order without granting personal hearing.
2.11 The Court held that before any adverse order is passed in adjudication proceedings, personal hearing must be offered to the noticee. Only if the noticee waives that right, or having been granted such opportunity fails to avail it, can the authority proceed ex parte.
2.12 Applying the same principle to the present case, the Court recorded that: (i) a notice for filing reply was issued on 28.06.2023, fixing 28.07.2023 as the date for filing reply; (ii) no separate or other date was fixed for personal hearing; (iii) no order was passed on the date fixed; and (iv) the impugned order dated 18.08.2023 was passed subsequently without fixing any separate date and without issuing any further notice for hearing.
2.13 On those facts, the Court held that the order effectively remained a wholly ex parte order, passed without affording the mandated opportunity of personal hearing.
2.14 The Court reaffirmed that such practice of denying opportunity of personal hearing to a person facing adjudication proceedings cannot be allowed to arise or exist.
Conclusions
2.15 The impugned order under Section 74 was held unsustainable in law, having been passed in gross violation of Section 75(4) and fundamental principles of natural justice, being effectively ex parte and without a proper personal hearing.
2.16 The impugned order dated 18.08.2023 was set aside.
2.17 The matter was remitted to the competent authority to pass a fresh order in accordance with law after affording due opportunity of hearing to the petitioner.
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