Taxpayer Wins Challenge Against Arbitrary Tax Assessment, Securing Right to Fair Hearing Under Section 75(4)

HC ruled in favor of petitioner challenging tax assessment order. The court found a violation of natural justice principles by denying a personal hearing under Section 75(4) of U.P. GST Act. The impugned order was set aside, and the matter was remitted to the tax authority to issue a fresh notice and provide an opportunity for oral hearing within two weeks.

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Issues:
Challenge to order raising demand for tax period 2017-18 due to denial of opportunity of oral hearing before the Assessing Authority.

Analysis:
The petitioner challenged an order passed by the Commercial/State Tax Officer, seeking an opportunity of oral hearing before the Assessing Authority. The petitioner contended that he was denied a personal hearing as the notice mentioned "NA" against columns for personal hearing details. The petitioner relied on Section 75(4) of the U.P. GST Act, 2017, citing a previous court decision that emphasized the mandatory nature of affording personal hearing before passing an adverse assessment order.

The respondent argued that the petitioner had declined the opportunity of hearing by marking "No" in the online reply to the show-cause notice. The respondent contended that the petitioner could not claim error in the order subsequently. However, the court emphasized the importance of providing an opportunity of hearing as per Section 75(4) of the Act, irrespective of the petitioner's initial choice regarding personal hearing.

The court agreed with the precedent set in Bharat Mint & Allied Chemicals case, emphasizing that the Assessing Authority must grant an opportunity of personal hearing before making an adverse decision. The court highlighted that in cases involving significant civil liability, ensuring a genuine opportunity of hearing is crucial to uphold principles of natural justice. Granting such an opportunity not only aligns with natural justice rules but also enables the authority to issue a well-reasoned order, facilitating a fair appeal process if needed.

Consequently, the court allowed the writ petition, setting aside the impugned order and remitting the matter to the Commercial/State Tax Officer to issue a fresh notice to the petitioner within two weeks. The petitioner was directed to appear before the authority for expeditious proceedings, ensuring a fair opportunity for a personal hearing and a reasoned decision-making process.

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