Taxpayer Wins Challenge Against GST Order: Mandatory Personal Hearing Violated, Order Quashed and Remanded Under Section 74 Justice

The HC allowed the writ petition challenging a GST order under Section 74 of U.P. G.S.T. Act, 2017. The Court found a violation of Section 75(4) due to denial of personal hearing, which is mandatory before passing an adverse order. The impugned order was set aside, and the matter was remitted to the Joint Commissioner to pass a fresh order after providing an opportunity of hearing.

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Issues:
Challenge to order under Section 74 of U.P. G.S.T. Act, 2017; Availability of appeal under Section 107 of the Act; Violation of Section 75(4) of the Act; Denial of opportunity of personal hearing; Gross violation of natural justice principles in passing the impugned order.

Analysis:
The judgment concerns a challenge to an order dated 18.10.2023, passed under Section 74 of the U.P. G.S.T. Act, 2017. The preliminary objection raised was regarding the availability of the remedy of appeal under Section 107 of the Act. The objection was countered by citing a violation of Section 75(4) of the Act, emphasizing the mandatory requirement of providing an opportunity of personal hearing to the assessee before passing any assessment/adjudication order against them. The judgment referred to a similar case where it was held that denying the opportunity of hearing to the assessee is wholly unacceptable, even if the substantive law has changed, and revenue authorities must adhere to procedural law.

The Court highlighted Section 75(4) of the Act, which mandates granting an opportunity of hearing upon a written request from the person chargeable with tax or penalty or when any adverse decision is contemplated. The impugned order in this case revealed that the petitioner had appeared before the competent authority on three dates and submitted replies as required. However, it was noted that the adjudicating authority did not issue any further notice for personal hearing or grant any opportunity of personal hearing to the petitioner, which was a violation of the procedural requirements.

The judgment also mentioned an Office Memo issued by the Commissioner, Commercial Tax, Uttar Pradesh, addressing the discrepancies in the scheduling of personal hearings and the passing of orders. It emphasized the importance of aligning the dates of reply submission, personal hearings, and order passing to ensure procedural fairness. The Court reiterated the fundamental principle of natural justice that personal hearing must be offered before passing any adverse order in an adjudication proceeding, and the impugned order in this case was deemed to be in gross violation of this principle.

Ultimately, the Court allowed the writ petition, setting aside the impugned order and remitting the matter back to the Joint Commissioner to pass a fresh order in accordance with the law after affording due opportunity of hearing to the petitioner. The judgment underscored the significance of upholding procedural fairness and ensuring that the principles of natural justice are adhered to in adjudication proceedings to safeguard the interests of justice.

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