2024 (10) TMI 1037 - HC - GST

Tax Order Invalidated for Procedural Unfairness: Hearing Rights Upheld and Fresh Opportunity Mandated Under GST Regulations

M/s Hindustan Enterprises Versus State of U.P. and Another

HC quashed tax order under UP GST Act due to violation of natural justice principles. The court found the order invalid for denying personal hearing to ... Challenge to order passed by the respondent No.2 u/s 74 of the Uttar Pradesh Goods and Services Tax Act, 2017 - violation of principles of natural justice - HELD THAT:- The factual matrix is such that the matter is squarely covered by a coordinate Bench judgment of this Court in Mahaveer Trading Company vs. Deputy Commissioner State Tax and another [2024 (3) TMI 334 - ALLAHABAD HIGH COURT], where it was held that 'before any adverse order passed in an adjudication proceeding, personal hearing must be offered to the noticee. If the noticee chooses to waive that right, occasion may arise with the adjudicating authority, (in those facts), to proceed to deal with the case on merits, ex-parte. Also, another situation may exist where even after grant of such opportunity of personal hearing, the noticee fails to avail the same. Leaving such situations apart, we cannot allow a practice to arise or exist where opportunity of personal hearing may be denied to a person facing adjudication proceedings.' Upon a perusal of record, it appears that the factual matrix is very similar to one in Mahaveer Trading Company's case - there are no reason to take a different stand. The impugned order dated 26.8.2024 passed by Deputy Commissioner, Sector-13, State Tax, Chetganj, Varanasi, Uttar Pradesh (Respondent No.2) is quashed and set-aside with a direction given to the officer concerned to grant the petitioner another opportunity of filing a fresh reply and thereafter fix a date of hearing and pass a reasoned order - Petition allowed. Issues:Violation of natural justice in passing the impugned order under the Uttar Pradesh Goods and Services Tax Act, 2017.Analysis:The judgment pertains to a writ petition under Article 226 of the Constitution of India challenging an order passed by the respondent under Section 74 of the Uttar Pradesh Goods and Services Tax Act, 2017. The court noted that the factual matrix resembled a previous judgment of a coordinate Bench in Mahaveer Trading Company vs. Deputy Commissioner State Tax. The court emphasized the importance of offering a personal hearing before passing any adverse order in an adjudication proceeding. It was highlighted that denying the opportunity of personal hearing would violate fundamental principles of natural justice. The court clarified that even if the noticee waives the right to a personal hearing or fails to avail it, the opportunity should not be denied in adjudication proceedings. The judgment emphasized that the impugned order was passed in gross violation of natural justice principles and could not be sustained. The court also mentioned that the self-imposed bar of an alternative remedy could not be applied in such cases, as it would be counterproductive to the interest of justice. The court directed the concerned officer to grant the petitioner another opportunity to file a fresh reply, fix a date of hearing, and pass a reasoned order within two months from the date of the judgment.In conclusion, the High Court quashed and set aside the impugned order passed by the Deputy Commissioner under the State Tax Act, directing a fresh opportunity for the petitioner to present their case. The judgment highlighted the significance of adhering to natural justice principles in adjudication proceedings and emphasized the importance of offering a personal hearing before passing adverse orders. The court's decision aimed to ensure a fair and just process for the petitioner within a specified timeline.