Tax Demand Quashed: Procedural Fairness Prevails as Hearing Rights Upheld in Critical Assessment Challenge

The HC ruled in favor of the petitioner, finding that the Assessing Authority violated procedural fairness by denying an opportunity for oral hearing before issuing a tax demand of Rs. 4,37,156.6/-. The court set aside the original order, directed a fresh notice to be issued within two weeks, and mandated the Assistant Commissioner to provide a proper hearing, emphasizing the principles of natural justice in tax proceedings.

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Issues involved:
The judgment deals with the challenge raised against the order passed by the Assistant Commissioner for the tax period 2019-20, where a demand in excess of Rs. 4,37,156.6/- was raised against the petitioner. The main issue revolves around the denial of opportunity of oral hearing before the Assessing Authority, as claimed by the petitioner.

Details of the Judgment:
The petitioner contended that he was completely denied the opportunity of oral hearing before the Assessing Authority, which is in violation of Section 75(4) of the U.P. GST Act, 2017. The petitioner relied on a previous court decision and a Gujarat High Court decision to support the argument that the Assessing Authority was required to provide an opportunity of personal hearing before passing an adverse assessment order.

The counsel for the revenue argued that the petitioner was denied the opportunity of hearing because he had declined it by selecting 'No' in the reply to the show-cause-notice submitted online. However, the court emphasized that the petitioner's choice to decline the opportunity of hearing should not negate the mandatory requirement for the Assessing Authority to provide such an opportunity before passing an adverse order.

The court, after considering the arguments from both sides and examining the relevant legal provisions, agreed with the view taken in a previous case that the Assessing Authority must afford the opportunity of personal hearing before making an adverse decision. The court highlighted the importance of providing a genuine opportunity of hearing, especially in cases involving heavy civil liability, to ensure the principles of natural justice are upheld.

In conclusion, the court allowed the writ petition, set aside the impugned order, and remitted the matter back to the Assistant Commissioner. The Assistant Commissioner was directed to issue a fresh notice to the petitioner within two weeks, and the petitioner was instructed to appear before the authority for further proceedings to be conducted promptly.

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