Tax Order Quashed: Mandatory Personal Hearing Violated, Procedural Fairness Restored Under Section 75(4)

HC allowed a writ petition challenging a tax order due to violation of procedural fairness. The court found that the petitioner was denied mandatory personal hearing under Section 75(4) of UP GST Act, 2017. HC quashed the original orders and directed respondents to provide a personal hearing and issue a reasoned order within six weeks, emphasizing principles of natural justice.

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Issues involved:
The issue involves a writ petition under Article 226 of the Constitution of India challenging an order passed by the Additional Commissioner, Grade - 2, for the tax period of October, 2021, due to the lack of personal hearing as mandated by Section 75(4) of the Uttar Pradesh Goods and Services Tax Act, 2017.

Summary:

Issue 1: Opportunity of Personal Hearing
Upon review, it was found that the petitioner was not provided with a "personal hearing," which is a mandatory requirement under Section 75(4) of the Uttar Pradesh Goods and Services Tax Act, 2017. The significance of the word "or" in Section 75(4) cannot be underestimated. It indicates the necessity of providing an opportunity for personal hearing in two distinct scenarios: either upon application by the individual subject to penalty or tax imposition, or in the event of contemplation of an adverse order. Personal hearing is crucial for procedural fairness and natural justice, ensuring individuals can present their case, respond to allegations, and address concerns directly to the decision-maker. The statutory mandate for personal hearing acknowledges the complexity of tax and penalty determinations, requiring a comprehensive understanding of circumstances before making final determinations.

Issue 2: Legal Precedent
The Court referenced the case of M/s Shree Sai Palace v. State of U.P. and Another, where it was held that orders cannot bypass the barriers of natural justice, emphasizing the necessity of affording the opportunity of hearing before passing orders. Citing judgments from Bharat Mint and Allied Chemicals v. Commissioner Commercial Tax and M/s Primeone Work Force Pvt. Ltd. v. Union of India, the Court reiterated the importance of upholding individual rights and preventing abuse of power through the provision of a fair hearing.

Judgment:
In light of the above, a writ of certiorari was issued against the orders dated July 12, 2023, and August 18, 2022, quashing and setting them aside. The respondent No. 3/Joint Commissioner, Corporate Circle, State Tax, was directed to grant the petitioner a personal hearing and subsequently pass a reasoned order within six weeks. The writ petition was allowed, emphasizing the importance of procedural fairness and natural justice in administrative proceedings.

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