Aman Traders Vs Deputy Commissioner And Another (Allahabad High Court)
The writ petition challenged an order dated 18.08.2023 passed under Section 74 of the UPGST Act, 2017. At the threshold, the respondents raised a preliminary objection regarding the availability of an alternative appellate remedy under Section 107 of the Act. The petitioner countered this objection by alleging violation of Section 75(4), which mandates granting an opportunity of hearing where an adverse decision is contemplated.
The Court examined a similar earlier decision in Writ Tax No. 303 of 2024, where it had emphasized that providing an opportunity of personal hearing before passing an assessment or adjudication order is a basic procedural requirement under taxing statutes. Section 75(4) expressly requires that such an opportunity be granted either upon written request or whenever an adverse decision is proposed.
In the earlier case, the record showed that although the assessee had appeared and filed replies on multiple dates pursuant to show-cause notices, no opportunity of oral or personal hearing was granted before passing the final order. The Court had found this approach unacceptable and contrary to mandatory procedural law. It also noted that the adjudicating authority neither issued any further notice nor fixed a date for personal hearing. The absence of personal hearing amounted to a denial of natural justice.
The Court also took note of an Office Memo dated 12.11.2024 issued by the Commissioner, Commercial Tax, Uttar Pradesh, addressing recurring procedural lapses. These included failure to mention dates and times of personal hearing, fixing hearing dates prior to or on the same date as the deadline for filing replies, and passing orders on dates not commensurate with the date of personal hearing. The memo clarified that the date of order should coincide with the date of personal hearing and emphasized strict compliance with procedural requirements.
Applying the same reasoning to the present case, the Court observed that the notice for filing a reply was issued on 28.06.2023, fixing 28.07.2023 as the date for reply. No separate or subsequent date for personal hearing was fixed. Without passing any order on the date fixed, the adjudicating authority passed the impugned order on 18.08.2023 without fixing a hearing date or issuing any further notice. The Court held that the order was wholly ex parte and could not be sustained.
The Court reiterated that before passing any adverse order in adjudication proceedings, an opportunity of personal hearing must be offered. While there may be situations where the noticee waives the right or fails to avail the opportunity despite being granted, denial of personal hearing as a practice is impermissible. Such denial constitutes a gross violation of the principles of natural justice.
Consequently, the Court held that the impugned order suffered from a fundamental procedural defect. In such circumstances, the self-imposed bar of alternative remedy could not be applied, as doing so would be counterproductive to the interests of justice. The Court also noted that the appellate authority lacks the power to remand proceedings, further justifying writ intervention.
Accordingly, the writ petition was allowed. The impugned order dated 18.08.2023 was set aside, and the matter was remitted to the Deputy Commissioner, Sector 4, State Tax, Muzaffarnagar, with a direction to pass a fresh order in accordance with law after affording due opportunity of hearing to the petitioner.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Heard Sri Suyash Agrawal, learned counsel for the petitioner and Sri Anand Agrawal, learned counsel for the respondents.
2. Challenge has been raised to the order dated 18.08.2023, passed by respondent no.1, under Section 74 of the UPGST Act, 2017.
3. At the very outset, learned Additional Chief Standing Counsel has raised a preliminary objection as to the availability of remedy of appeal under Section 107 of the Act.
4. That objection has been met by the learned Counsel appearing for the petitioner on the strength of (violation of) Section 75(4) of the Act.
5. In similar circumstances, Writ Tax No.303 of 2024, (Mahaveer Trading Company versus Deputy Commissioner State Tax and Another) has been allowed. That order dated 04.03.2024 reads as below:-
“5. It is basic to procedural law under taxing statutes that opportunity of personal hearing must be provided to an assessee before any assessment/adjudication order is passed against him. Thus, we find it strange and wholly unacceptable merely because the substantive law has changed, the revenue authorities have changed their approach and are failing to observe that mandatory requirement of procedural law. They have thus denied opportunity of hearing to the assessee.
6. Section 75(4) of the Act reads as below:
“An opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person.”
7. Perusal of the impugned order reveals, the petitioner appeared before the competent authority on three dates. With respect to those dates, the impugned order reads as below:
8. Thus, it is established on record that on all three dates, the petitioner had been called to file its reply on the points specified in the respective show-cause notice issued. The petitioner submitted its reply on each occasion. Those replies have been extracted in the impugned order. After recording the reply submitted on 27.10.2022, the adjudicating authority has chosen to deal with the merits of the replies submitted and passed a merit order.
9. It transpires from the record, neither the adjudicating authority issued any further notice to the petitioner to show cause or to participate in the oral hearing, nor he granted any opportunity of personal hearing to the petitioner.
10. On query made, the learned Additional Chief Standing Counsel fairly submits, in light of similar occurrences, noticed in other litigation, he had apprised the Commissioner, Commercial Tax. In turn, the Commissioner, Commercial Tax, Uttar Pradesh, has issued Office Memo No. 1406 dated 12.11.2024. The same has been addressed to all Additional Commissioner to be communicated to all field formations for necessary compliance. A copy of the same has been made available to this Court. It reads as below:
“1. The column in which date of personal hearing has to be mentioned, only N.A. is mentioned without mentioning any date.
2. The column in which time of personal hearing has to be mentioned, only N.A. is mentioned without mentioning time of hearing.
3. In some cases, the date of personal hearing is prior to which reply to the Show Cause Notice has to be submitted this is non-est and this practice has to be discontinued. The date of reply to the Show Cause Notice has to be definitely prior to the date of personal hearing.
4. In some cases, the date of personal hearing is on the same date to which reply to the Show Cause Notice has to be submitted-this is non-est and this practice has to be discontinued. The date of reply to the Show Cause Notice has to be definitely prior to the date of personal hearing.
5. In all cases observed, the date of passing order either u/s 73(9)/74(9) etc. of the Act is not commensurate to the date of personal hearing. It is trite law that the date of the order has to be passed on the date of personal hearing. For eg., the date of furnishing reply to SCN is 15.11.2023 and date of personal hearing is 17.11.2023, then the date of order has to be 17.11.2023″
11. In view of the facts noted above, 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.
12. Thus, the impugned order cannot be sustained in the eyes of law. It has been passed in gross violation of fundamental principles of natural justice. The self imposed bar of alternative remedy cannot be applied in such facts. If applied, it would be of no real use. In fact, it would be counter productive to the interest of justice. Here, it may be noted, the appeal authority does not have the authority to remand the proceedings.
6. In the present case as well the notice for filing of reply was issued on 28.06.2023 for the date 28.07.2023. No separate / other date was fixed for hearing. Yet, without passing any order on the date fixed, the impugned order has been passed on 18.08.2023 without fixing any date and without issuing any further notice for another date of hearing.
7. In view of above facts, we find that the present order has remained wholly ex-parte order that may not be sustained in view of the our earlier order passed in Writ Tax No.303 of 2024, (Mahaveer Trading Company versus Deputy Commissioner State Tax and Another).
8. Accordingly, the writ petition is allowed in terms of the order dated 04.03.2024 passed in Writ Tax No.303 of 2024, (Mahaveer Trading Company versus Deputy Commissioner State Tax and Another). The impugned order dated 18.08.2023 passed by the respondent no.1 – Deputy Commissioner,, Sector 4, State Tax, Muzaffar Nagar is, hereby, set-aside.
9. The matter is remitted to the respondent no.1 – Deputy Commissioner,, Sector 4, State Tax, Muzaffar Nagar to pass a fresh order, in accordance with law, after affording due opportunity of hearing to the petitioner.
