2024 (6) TMI 162 - HC - GST

Show cause notice violated natural justice by omitting hearing date, place, and time despite Section 75(4) mandate

Eveready Industries India Ltd. Lko. Thru. Signatory Sh. Sounik Mukherjee Versus State Of U.P. Thru. Secy. Ministry Finance, U.P. Lko. And Another

The Allahabad HC held that despite Section 75(4) of the Act mandating opportunity of hearing, the show cause notice violated natural justice principles by ... Violation of principles of natural justice - impugned SCN does not provide any date, place and time of hearing despite the same being mandatory procedure - ed that despite the mandate of Section 75(4) of the Act providing personal hearing and despite the petitioner specifically asking for personal hearing - HELD THAT:- This Court having considered the submissions made by the learned counsel for the parties has gone through the leading judgment in the case of BHARAT MINT AND ALLIED CHEMICALS VERSUS COMMISSIONER COMMERCIAL TAX AND 2 OTHERS [2022 (3) TMI 492 - ALLAHABAD HIGH COURT] and finds that the said judgment although has read into the language of Section 75(4) of the Act and the right of 'personal' hearing, it has not mentioned any casus omissus on the part of the legislature reading into the statute words like 'personal' hearing' as the Act itself only states that an opportunity of hearing shall be given. In COMMISSIONER OF SALES TAX, UTTAR PRADESH, LUCKNOW VERSUS PARSON TOOLS AND PLANTS, KANPUR [1975 (2) TMI 86 - SUPREME COURT], the Supreme Court observed that the will of the legislature is the supreme law of the land, and demands, perfect obedience. Judicial power is never exercised for the purpose of giving effect to the will of the judges; always for the purpose of giving effect to the will of the legislature; or in other words, to the will of the law. Therefore, where the legislature clearly declares its intent in the scheme and language of a Statute, it is the duty of the Court to give full effect to the same without scanning its wisdom or policy, and without engrafting, adding or implying anything which is not congenial to or consistent with such expressed intent of the law; if the Statute is a taxing Statute. In GODREJ & BOYCE MANUFACTURING COMPANY LIMITED VERSUS DY. COMMISSIONER OF INCOME-TAX & ANR. [2017 (5) TMI 403 - SUPREME COURT] the Supreme Court had observed that where the words of the Statute are clear and unambiguous, recourse cannot be had to principles of interpretation other than the literal rule. It further observed that it is the bounden duty and obligation of the Court to interpret the Statue as it is. It further observed that it is contrary to all rules of construction to read words into a Statute which the legislature in its wisdom, has deliberately not incorporated. As a matter of first principle, a casus omissus cannot be supplied by the Court, unless there is a clear case of necessity and when reason is found within the Statute itself. In applying the rule of plain meaning, any hardship and inconvenience cannot be the basis to alter the meaning of the language employed by the legislation. This is especially so in fiscal statutes and penal statutes. Nevertheless, if the plain language results in absurdity, the Court is entitled to determine the meaning of the word in the context in which it is used, keeping in view the legislative purpose. Not only that, if the plain construction leads to an anomaly or absurdity, the Court having regard to the hardship and consequences that flow from such a provision can even explain the true intention of the legislation. It is evident from the scheme of Section 74 that initially a notice along with a statement of tax payable along with penalty has to be issued by the proper officer within the time limit as prescribed, to which a representation can be made by the assessee in case he is dissatisfied with such computation of tax and penalty. On the other hand, in case the assessee pays the amount as given in the notice along with interest payable thereon and penalty, then the proper officer may issue orders which may conclude the proceedings - It is when the assessee is dissatisfied then, whether in addition to being given an opportunity for submitting representation, he is also entitled to personal hearing is the question that this court has to decide. Taking into account the settled principles of interpretation of Statutes, (a) all Sections of a Statue need to be read together, (b) no words, Section in a Statute can be rendered otiose, (c) any ambiguity in a charging Section must be read in favour of the assessee, (d) a casus omissus can be supplied if the Court, having an overall view of the scheme of the Statute is convinced that the legislature did intend a certain manner of conducting pre-decisional hearing but draftsman failed to add the necessary words to make it plain and beyond doubt; the word “personal” can easily be construed to have been intended to be added but has been left out erroneously. The matter is remitted back to the proper officer to provide opportunity of personal hearing to the petitioner and then to pass a fresh order in accordance with statutory provisions - petition allowed by way of remand. Issues Involved:1. Quashing of the impugned Order passed u/s 74 of the Uttar Pradesh Goods & Service Tax Act, 2017.2. Quashing of the impugned Show Cause Notice issued u/s 74 of the UPGST Act.Summary:Issue 1: Quashing of the impugned Order passed u/s 74 of the Uttar Pradesh Goods & Service Tax Act, 2017.The petitioner challenged the order dated 19.02.2024 issued in FORM GST DRC-1 and the rectification order dated 27.04.2024 issued in FORM GST DRC-08. The petitioner argued that no audit report was issued despite compliance with audit notices dated 05.05.2022 and 05.01.2023. The show cause notice issued on 07.08.2023 did not provide any date, place, and time of hearing, violating the mandatory procedure and principles of natural justice as per Section 75(4) of the Act. The petitioner cited judgments from Co-ordinate Benches emphasizing the necessity of personal hearing, which was denied in this case.Issue 2: Quashing of the impugned Show Cause Notice issued u/s 74 of the UPGST Act.The petitioner argued that the show cause notice violated the settled principles of natural justice by not providing an opportunity for personal hearing, despite a specific request. The court referred to the judgment in Bharat Mint & Allied Chemicals, which emphasized that an opportunity of hearing is mandatory under Section 75(4) of the Act. The court also noted that the availability of an alternative remedy is not a complete bar to entertain a writ petition under Article 226 of the Constitution of India, especially when there is a violation of principles of natural justice.Court's Analysis:The court examined the provisions of Sections 73, 74, and 75 of the Act, noting that Section 75(4) mandates an opportunity of hearing where a request is received in writing or where any adverse decision is contemplated. The court emphasized that all sections of a statute must be read together and no section should be rendered otiose. The court concluded that the word 'personal' could be construed to have been intended in Section 75(4) and agreed with the Coordinate Bench decisions cited by the petitioner.Conclusion:The writ petition was allowed, and the impugned orders dated 19.02.2024 and 27.04.2024 were set aside. The matter was remitted back to the proper officer to provide an opportunity for personal hearing to the petitioner and to pass a fresh order in accordance with statutory provisions.