Procedural Violation Invalidates Tax Assessment Order: Denial of Personal Hearing Renders CGST Section 74(9) Order Null and Void

HC ruled that an order under CGST Act Section 74(9) was invalid due to violation of procedural law. The court found that the Deputy Commissioner failed to provide the petitioner an opportunity of personal hearing as mandated by Section 75(4), thereby breaching principles of natural justice. The impugned order was set aside, and the matter was remitted back for fresh adjudication with proper hearing.

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Issues Involved: Challenge to order u/s 74(9) of CGST Act, availability of appeal u/s 107, violation of procedural law u/s 75(4) of the Act.

The judgment of the Allahabad High Court dealt with a challenge to an order passed by the Deputy Commissioner, Commercial Tax Department, under Section 74(9) of the Central Goods and Services Tax Act, 2017. The court addressed the preliminary objection raised regarding the availability of the remedy of appeal under Section 107 of the Act. The petitioner argued against this objection citing a violation of Section 75(4) of the Act, emphasizing the importance of providing an opportunity of personal hearing to the assessee before passing any assessment or adjudication order.

The court highlighted the significance of Section 75(4) of the Act, which mandates that an opportunity of hearing must be granted to the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person. It was noted that in the present case, the adjudicating authority failed to provide any notice for personal hearing to the petitioner, thereby denying the fundamental right of being heard before an adverse order is passed.

The court referred to an Office Memo issued by the Commissioner, Commercial Tax, Uttar Pradesh, addressing the issue of lack of personal hearing being granted in various cases. The court emphasized that before passing any adverse order in an adjudication proceeding, it is imperative to offer personal hearing to the noticee. The court stressed that the denial of the opportunity of personal hearing goes against the principles of natural justice and cannot be allowed to persist.

Consequently, the court held that the impugned order was passed in violation of fundamental principles of natural justice and set it aside. The matter was remitted back to the Deputy Commissioner, Commercial Tax Department, to pass a fresh order after affording due opportunity of hearing to the petitioner. The court also directed the Commissioner, Commercial Tax, Uttar Pradesh, to take remedial measures, including disciplinary proceedings against erring officials, to prevent such violations of natural justice in the future.

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