Tax Order Invalidated Due to Procedural Lapses: Petitioner Granted Opportunity to Present Case and Respond

HC allowed a writ petition challenging an ex-parte tax order under UP GST Act. The court found procedural deficiencies in the original notice, which did not provide proper opportunity for personal hearing. The impugned order was set aside, and the matter was remitted back to the tax authority for fresh proceedings with a directive for the petitioner to submit a reply and appear before the Assessing Authority.

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Issues involved: Challenge to ex-parte order u/s 73 of Uttar Pradesh Goods and Services Tax Act, 2017 for lack of opportunity of personal hearing.

Summary:

Issue 1: Lack of opportunity of personal hearing

The challenge was raised against the ex-parte order dated 30.09.2023 issued by the Commercial Tax Officer, Sector-4, Ghaziabad, Uttar Pradesh, as the petitioner was not afforded any opportunity of personal hearing. The first notice under Section 73 of the Act did not propose to grant personal hearing, as "NA" was specified against the column for the date of personal hearing. The petitioner was only called to file its reply, and non-compliance could have led to closure of the opportunity to submit a written reply. However, as per Section 75 of the Act, the petitioner did not lose the right to participate in the oral hearing even if the written reply was not submitted. The rules of natural justice require both written and oral hearings, and failure to avail one opportunity should not lead to denial of the other.

Issue 2: Merits of the case

The petitioner's counsel argued that a detailed reply was not required, and any discrepancies in the returns could have been clarified if a personal hearing had been granted. It was mentioned that the petitioner's business operations had been closed since 2020, which led to the mistake of not responding to the notice in time. The Court found that the impugned order was passed contrary to the mandatory procedure, and the deficiency of procedure was critical to the outcome of the proceedings.

Judgement

The High Court set aside the impugned order dated 30.12.2023 and remitted the matter to the respondent No. 2 to pass a fresh order. The petitioner was directed to file its final reply to the show cause notice within two weeks and appear before the Assessing Authority on 06.05.2024. The Assessing Authority was instructed to pass an appropriate reasoned order after the petitioner's appearance. Consequently, the writ petition was allowed.

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