2024 (5) TMI 515 - HC - GST

High Court Quashes Tax Assessment Order for Violating Natural Justice, Mandates Personal Hearing Under Section 75(4)

HC allowed petitioner's writ challenging tax assessment order. The court found a violation of natural justice principles due to denial of oral hearing, ... Violation of principles of natural justice - opportunity of hearing to not provided to the petitioner by mentioning 'NA' against column description 'Date of personal hearing' - HELD THAT:- Once it has been laid down by way of a principle of law that a person/assessee is not required to request for 'opportunity of personal hearing' and it remained mandatory upon the Assessing Authority to afford such opportunity before passing an adverse order, the fact that the petitioner may have signified 'No' in the column meant to mark the assessee's choice to avail personal hearing, would bear no legal consequence. Even otherwise in the context of an assessment order creating heavy civil liability, observing such minimal opportunity of hearing is a must. Principle of natural justice would commend to this Court to bind the authorities to always ensure to provide such opportunity of hearing. It has to be ensured that such opportunity is granted in real terms. Here, we note, the impugned order itself has been passed on 05.11.2022, while reply to the show-cause-notice had been entertained on 06.09.2022. The stand of the assessee may remain unclear unless minimal opportunity of hearing is first granted. Only thereafter, the explanation furnished may be rejected and demand created - Not only such opportunity would ensure observance of rules of natural of justice but it would allow the authority to pass appropriate and reasoned order as may serve the interest of justice and allow a better appreciation to arise at the next/appeal stage, if required. The matter is remitted to the respondent no. 2/Assistant Commissioner, State Tax, Sector-5, Mirzapur to issue a fresh notice to the petitioner within a period of two weeks from today - Petition allowed by way of remand. Issues involved: Challenge to order dated 05.11.2022 passed by Assistant Commissioner for tax period 2018-19, regarding denial of opportunity of oral hearing to the petitioner.Summary:The petitioner challenged an order passed by the Assistant Commissioner for a tax period, contending that he was denied the opportunity of oral hearing. The petitioner argued that the Assessing Authority did not provide any opportunity for personal hearing, as required by law. The petitioner relied on Section 75(4) of the U.P. GST Act, 2017, and previous court decisions to support the claim that the Assessing Authority was obligated to grant a personal hearing before making an adverse assessment order. On the other hand, the revenue's counsel argued that the petitioner had declined the opportunity for a hearing by selecting 'No' in the online reply to the show-cause notice. The court examined Section 75(4) of the Act and agreed with previous court decisions that emphasized the mandatory nature of providing a personal hearing before passing an adverse order. The court stressed the importance of granting a fair opportunity of hearing, especially in cases involving significant civil liabilities. It emphasized the principles of natural justice and the need for authorities to ensure genuine opportunities for hearing to uphold fairness and justice. Consequently, the court allowed the writ petition, set aside the impugned order, and directed the matter to be remitted for a fresh notice to be issued to the petitioner, ensuring a proper opportunity for hearing and concluding the proceedings promptly.