Jps Buildtech Private Limited Vs State of U.P. and Another (Allahabad High Court)
The Allahabad High Court, in Jps Buildtech Private Limited Vs State of U.P. and Another, held that an opportunity of personal hearing is mandatory under Section 75(4) of the Uttar Pradesh Goods and Services Tax Act, 2017, whenever an adverse decision is contemplated against a taxpayer. The obligation exists independently of whether the taxpayer has expressly requested a hearing. The Court accordingly set aside the assessment order dated 18 August 2023 passed by the Deputy Commissioner, State Tax, Sector-9, Meerut, and remanded the matter for fresh proceedings after granting the petitioner an effective opportunity of hearing.
The petitioner relied upon Section 75(4) of the U.P. GST Act, which provides for an opportunity of hearing where a written request is received from the person liable to tax or penalty, or where any adverse decision is contemplated against that person. The petitioner also relied upon the coordinate Bench decision in Bharat Mint & Allied Chemicals Vs Commissioner Commercial Tax & 2 Ors., (2022) 48 VLJ 325, and the Gujarat High Court decision in M/S Hitech Sweet Water Technologies Pvt. Ltd. Vs State of Gujarat, 2022 UPTC (Vol. 112) 1760.
The Court emphasised that an assessment order creating substantial civil liability must be preceded by a genuine opportunity of hearing. Such a hearing is not merely procedural; it enables the taxpayer to clarify its explanation and assists the assessing authority in passing a reasoned order. The Court also observed that a proper hearing facilitates meaningful examination of the dispute at the appellate stage, if an appeal becomes necessary.
Accordingly, the writ petition was allowed, and the assessment order dated 18 August 2023 was set aside. The matter was remitted to the Deputy Commissioner, State Tax, Sector-9, Meerut, with a direction to issue a fresh notice within two weeks from the date of the judgment. The petitioner undertook to appear on the next date fixed, and the authority was expected to conclude the proceedings as expeditiously as possible. The Court did not adjudicate the substantive tax liability on merits.
Cases Discussed
- Bharat Mint & Allied Chemicals Vs. Commissioner Commerical Tax & 2 Ors., (2022) 48 VLJ 325 (Allahabad High Court) — Followed; personal hearing is mandatory before an adverse GST assessment order, even without an express request by the taxpayer.
- M/S Hitech Sweet Water Technologies Pvt. Ltd. Vs. State of Gujarat, 2022 UPTC (Vol. 112) 1760 (Gujarat High Court) — Relied upon by the petitioner in support of the requirement of personal hearing.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Learned counsel for the petitioner, at the very outset, submits that he is not pressing prayer No. 2.
2. Order accordingly.
3. Heard Sri Pranjal Shukla, learned counsel for the assessee and Sri Nimai Das, learned Additional Chief Standing Counsel for the State Respondents.
4. In absence of any dispute as to fact, the matter has been proceeded with the consent of parties at the fresh stage itself.
5. Challenge has been raised to the order dated 18.08.2023 passed by the Deputy Commissioner, State Tax, Sector-9, Meerut, for the tax period 2020 to 2021, whereby demand in excess to Rs. 54,76,018/- has been raised against the present petitioner.
6. Solitary ground being pressed in the present petition is, the only notice in the proceedings was issued to the petitioner on 14.07.2023 seeking its reply by 14.08.2023.
7. Relying on Section 75(4) of the U.P. GST Act, 2017 (hereinafter referred to as the ‘Act’) as interpreted by a coordinate bench of this Court in Bharat Mint & Allied Chemicals Vs. Commissioner Commerical Tax & 2 Ors., (2022) 48 VLJ 325, it has been then asserted, the Assessing Authority was bound to afford opportunity of personal hearing to the petitioner before he may have passed an adverse assessment order. Insofar as the assessment order has raised disputed demand of tax and penalty about Rs. 26 Lacs, the same is wholly adverse to the petitioner. In absence of opportunity of hearing afforded, the same is contrary to the law declared by this Court in Bharat Mint & Allied Chemicals (supra). Reliance has also been placed on a decision of the Gujarat High Court in M/S Hitech Sweet Water Technologies Pvt. Ltd. Vs. State of Gujarat, 2022 UPTC (Vol. 112) 1760.
8. Having hearing learned counsel for the parties and having perused the record, Section 75(4) of the Act reads as under:
“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.”
9. We find ourselves in complete agreement with the view taken by the coordinate bench in Bharat Mint & Allied Chemicals (supra). Once it has been laid down by way of a principle of law that a person/assessee is not required to request for “opportunity of personal hearing” and it remained mandatory upon the Assessing Authority to afford such opportunity before passing an adverse order, the fact that the petitioner may have signified ‘No’ in the column meant to mark the assessee’s choice to avail personal hearing, would bear no legal consequence.
10. Even otherwise in the context of an assessment order creating heavy civil liability, observing such minimal opportunity of hearing is a must. Principle of natural justice would commend to this Court to bind the authorities to always ensure to provide such opportunity of hearing. It has to be ensured that such opportunity is granted in real terms. Here, we note, the impugned order itself has been passed on 18.08.2023, while reply to the show-cause-notice had been entertained on 15.07.2023. The stand of the assessee may remain unclear unless minimal opportunity of hearing is first granted. Only thereafter, the explanation furnished may be rejected and demand created.
11. Not only such opportunity would ensure observance of rules of natural of justice but it would allow the authority to pass appropriate and reasoned order as may serve the interest of justice and allow a better appreciation to arise at the next/appeal stage, if required.
12. Accordingly, the present writ petition is allowed. The impugned order dated 18.08.2023 is set aside. The matter is remitted to the Respondent No.2/Deputy Commissioner, State Tax, Sector-9, Meerut, to issue a fresh notice to the petitioner within a period of two weeks from today. The petitioner undertakes to appear before that authority on the next date fixed such that proceedings may be concluded, as expeditiously as possible.
