Adjudication order quashed for denying personal hearing, violation of natural justice; authority told to reconsider with fresh hearing

HC held that the adjudication order was vitiated for violation of principles of natural justice, as no opportunity of personal hearing was afforded before passing an adverse order. Relying on a coordinate Bench decision mandating offer of personal hearing to the noticee prior to adjudication, the Court found the factual matrix to be identical and declined to take a different view. The impugned order dated 26.08.2023 was quashed, and the authority was directed to permit a fresh reply, grant personal hearing, and pass a reasoned order afresh.

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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 an effective opportunity of personal hearing, is vitiated for violation of principles of natural justice.

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

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of adjudication order under Section 74 where personal hearing not effectively afforded

Interpretation and reasoning

2.1 The Court noted that the factual matrix was "squarely covered" by a prior coordinate Bench decision, wherein it was held that certain systemic defects in show cause notice and hearing procedure (such as mentioning "N.A." in the personal hearing date and time columns, fixing non-est or coinciding dates for reply and personal hearing, and lack of commensurateness between date of hearing and date of order) result in denial of a real and effective opportunity of personal hearing.

2.2 The Court reiterated that, before passing any adverse order in an adjudication proceeding, an opportunity of personal hearing must be offered to the noticee. Only if such right is expressly waived, or if despite grant of such opportunity the noticee fails to appear, can the authority proceed ex parte.

2.3 It was emphasized that a practice which results in denial of opportunity of personal hearing to a person facing adjudication proceedings cannot be allowed to arise or continue, and that orders passed in such manner are in "gross violation of fundamental principles of natural justice."

2.4 On examining the record, the Court found the factual situation in the present matter to be "very similar" to that in the earlier decision, and therefore saw no reason to take a different view.

Conclusions

2.5 The impugned order under Section 74 was held to be unsustainable in law as it was passed in violation of the principles of natural justice, particularly for want of a proper and meaningful opportunity of personal hearing.

2.6 The impugned order dated August 26, 2023 was quashed and set aside.

2.7 The concerned officer was directed to grant the petitioner another opportunity to file a fresh reply, thereafter fix a date of hearing, and pass a reasoned order, with the entire exercise to be completed within two months.

Issue 2: Effect of alternative remedy in the face of violation of natural justice and absence of remand power

Interpretation and reasoning

2.8 Relying on the coordinate Bench decision, the Court reiterated that where an order is passed in gross violation of the principles of natural justice, the "self imposed bar of alternative remedy cannot be applied."

2.9 It was recorded that, in such circumstances, insisting on exhaustion of the appellate remedy would be "of no real use" and "counter productive to the interest of justice," particularly because the appellate authority does not possess the power to remand the matter for fresh adjudication.

Conclusions

2.10 The existence of an alternative statutory appeal did not preclude the exercise of writ jurisdiction in the present case, given the fundamental procedural infirmity and the limited powers of the appellate authority.

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