2025 (4) TMI 621 - HC - GST

Taxpayer's Missed Hearing Opportunity Invalidates Procedural Objections Under GST Act Section 56

KPS Iron and Alloys Company Private Limited Versus State of U.P. and 2 others

The HC examined a tax order under the UP GST Act, focusing on whether natural justice principles were violated by not providing a personal hearing. After ... Challenge to SCN - Violation of principles of natural justice - alleged lack of an opportunity for a personal hearing for the petitioner - HELD THAT:- The very fact that in the reply uploaded on 29.07.2024, indication was made that documents have already been submitted, the same essentially refer to the documents admittedly produced by the petitioner on 26.10.2023 pursuant to the directions issued by this Court and apparently on 28.08.2024, the plea raised that personal appearance was made on behalf of the petitioner for filing the hard copy of the documents, cannot be accepted. Once the petitioner chose not to appear on 28.08.2024 despite opportunity having been provided, the passing of the order by the competent authority after going through the response filed along with documents, cannot be faulted. There is also substance in the submissions made by counsel for the respondents that the petitioner has efficacious alternative remedy of filing appeal under Section 107 of the Act, however, except for indicating in Para 43 of the writ petition that petitioner is aware of availability of alternative remedy of filing the appeal but since the order was passed in violation of principles of natural justice, petition under Article 226 was being filed, nothing else has been indicated. s it has been found by this Court based on the material available on record, that no appearance was made by the petitioner on 28.08.2024, the date fixed for personal hearing, the allegations regarding violation of principles of natural justice cannot be accepted. Conclusion - As it has been found by this Court based on the material available on record, that no appearance was made by the petitioner on 28.08.2024, the date fixed for personal hearing, the allegations regarding violation of principles of natural justice cannot be accepted. Petition dismissed. ISSUES PRESENTED and CONSIDEREDThe core legal issue considered in this judgment was whether the order dated 11.09.2024, passed under Section 74(9) of the Uttar Pradesh Goods and Services Tax Act, 2017, violated the principles of natural justice due to the alleged lack of an opportunity for a personal hearing for the petitioner.ISSUE-WISE DETAILED ANALYSISRelevant legal framework and precedents:The case revolves around the provisions of the Uttar Pradesh Goods and Services Tax Act, 2017, particularly Section 74, which deals with the determination of tax not paid or short paid, and Section 75(4), which mandates that an opportunity of hearing must be granted to the taxpayer before passing any order.Court's interpretation and reasoning:The Court examined whether the principles of natural justice were violated by not providing the petitioner a personal hearing before the issuance of the order dated 11.09.2024. The Court noted that the petitioner had been given a chance to appear on 28.08.2024 for a personal hearing, which they allegedly did not utilize. The Court emphasized that the petitioner had the opportunity to present their case and documents, but there was no evidence of personal appearance on the specified date.Key evidence and findings:The petitioner argued that they submitted a 16-page written clarification along with supporting documents on 28.08.2024, but the Court found no evidence of personal appearance or request for rescheduling the hearing. The respondents contended that the petitioner did not appear on the date fixed for hearing and did not request an alternative date, thus justifying the issuance of the order based on the documents already submitted.Application of law to facts:The Court applied the principles of natural justice as enshrined in Section 75(4) of the Act. It determined that the petitioner had been given an opportunity for a hearing but failed to appear, thereby negating the claim of a violation of natural justice. The Court also noted the availability of an alternative remedy through appeal under Section 107 of the Act, which the petitioner did not pursue.Treatment of competing arguments:The petitioner argued that the absence of a personal hearing violated natural justice, while the respondents maintained that the petitioner was given adequate opportunity to present their case. The Court sided with the respondents, concluding that the petitioner did not take advantage of the opportunity provided for a personal hearing.Conclusions:The Court concluded that there was no violation of the principles of natural justice, as the petitioner failed to appear for the personal hearing on the designated date. Consequently, the petition was dismissed.SIGNIFICANT HOLDINGSThe Court held that the principles of natural justice require an opportunity for a hearing, but when such an opportunity is provided and not utilized, the claim of violation cannot stand. The Court stated, 'Once the petitioner chose not to appear on 28.08.2024 despite opportunity having been provided, the passing of the order by the competent authority after going through the response filed along with documents, cannot be faulted.'The Court emphasized the importance of utilizing available legal remedies, noting that the petitioner had an efficacious alternative remedy of filing an appeal under Section 107 of the Act, which was not pursued.Ultimately, the Court dismissed the petition, reinforcing the principle that procedural opportunities must be actively utilized by parties to claim a breach of natural justice.