Prayagraj Power Generation Company Limited Vs Joint Commissioner (Corporate Circle) State Tax (Allahabad High Court)
The Allahabad High Court allowed the writ petition filed by Prayagraj Power Generation Company Limited, engaged in electricity generation, power supply and sale of fly ash, challenging the adjudication order dated 29 December 2023 and appellate order dated 30 September 2024 concerning FY 2017–18. Following scrutiny discrepancies raised through Form GST ASMT-10, the department issued a show cause notice under Section 73 proposing tax of ₹20,71,67,168, interest under Section 50 and penalty of ₹2,07,16,715. The petitioner submitted that the deadline for filing its reply and the scheduled personal hearing were fixed on the same date. Although a subsequent reminder was issued and the petitioner sought additional time, the adjudicating authority confirmed the demand through an ex parte order without fixing a further hearing. The appellate authority subsequently dismissed the appeal without adequately addressing the grounds and written submissions.
The High Court observed that the show cause notice and reminder had fixed identical dates for submitting the reply and attending the personal hearing. It referred to the Commissioner of Commercial Tax’s Office Memo No. 1406 dated 12 January 2024, which clarified that these dates could not coincide. Relying on Bharat Mint & Allied Chemicals, B.L. Pahariya Medical Store, MSQ Steel Private Limited and Aman Traders, the Court reiterated that an assessee need not specifically request a personal hearing where the authority is required to provide one before passing an adverse order. The Court also referred to Supreme Court authorities on natural justice and reasoned decisions, including Assistant Commissioner, Commercial Tax Vs Shukla & Brothers.
The Court further found that the appellate authority had dismissed the appeal without recording independent reasons. Holding that the adjudication and appellate orders could not be sustained, it quashed both orders and remanded the matter to the Joint Commissioner, State Tax, Gautam Buddha Nagar, for fresh consideration in accordance with law after granting due opportunity of hearing to all stakeholders. The judgment concerns procedural fairness and does not determine the underlying GST liability on merits.
Cases Discussed
- Assistant Commissioner, Commercial Tax Vs. Shukla & Brothers — (2010) 30 VST 114 (SC). Cited by the petitioner and relied upon by the High Court for the requirement that judicial and quasi-judicial orders must contain reasons.
- Bharat Mint & Allied Chemicals Vs. CCT — (2022) 59 GSTL 394 (Allahabad High Court). Relied upon for the mandatory nature of personal hearing before an adverse GST order.
- B.L. Pahariya Medical Store Vs. State of U.P. — (2023) 99 GST 653 (Allahabad High Court). Cited for the principle that a taxpayer need not specifically request a hearing before an adverse order.
- MSQ Steel Private Limited Vs. Deputy Commissioner & Another — Writ Tax No. 1687/2024, decided on 15.10.2024 (Allahabad High Court). Cited as authority concerning the mandatory opportunity of personal hearing.
- Aman Traders Vs. Deputy Commissioner & Another — Writ Tax No. 349/2024, decided on 12.03.2024 (Allahabad High Court). Relied upon in support of the requirement of personal hearing.
- Nelson Motis Vs. Union of India — (1992) 4 SCC 711 (Supreme Court). Referred to by the High Court in its discussion of the applicable judicial authorities.
- State Bank of India Vs. Rajesh Agarwal & Others — (2023) 6 SCC 1 (Supreme Court). Referred to in the context of natural justice and fair procedure.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Heard Shri Suyash Agarwal, learned counsel for the petitioner and learned ACSC for the State – respondents.
2. The instant writ petition has been filed against the impugned order dated 30.09.2024 passed by the respondent no. 2 as well as the impugned order dated 29.12.2023 passed by the respondent no. 1.
3. Learned counsel for the petitioner submits that petitioner is engaged in the business of generation of electricity and supply of power as well as sale of fly ash. He further submits that on 11.04.2023, the respondent no. 1 issued a notice directing the petitioner to file reply on 13 points discrepancies detected during the scrutiny of returns. Thereafter, the respondent no. 1 issued notice dated 17.09.2023 undersection 73 of the GST Act for the financial year 2017-18 proposing imposition of tax, penalty and interest, to which the petitioner submitted its reply on 22.11.2023. Thereafter, vide the ex parte impugned order dated 29.12.2023, the tax, penalty and interest was confirmed. Aggrieved by the said order, the petitioner preferred an appeal, which has been dismissed vide impugned order dated 30.09.2024.
4. Learned counsel for the petitioner further submits that in the show cause notice undersection 73 of the GST Act , the date & time of personal hearing was fixed on 17.10.2023; whereas, the time to furnish reply was also upto 17.10.2023. He further submits that no separate date was fixed for hearing and therefore, the fixation of personal hearing before expiry of time to file reply is in clear violation of the principles of natural justice. He further submits that the impugned order has been passed without affording an opportunity of hearing to the petitioner. He further submits that the appellate authority has neither considered the grounds of appeal, nor considered the written submission filed by the petitioner while dismissing the appeal. In support of his submissions, he has placed reliance on the judgement of the Apex Court in Assistant Commissioner, Commercial Tax Vs. Shukla & Brothers [(2010) 30 VST 114 (SC)].
5. Per contra, learned ACSC supports the impugned orders.
6. After hearing learned counsel for the parties, the Court has perused the record.
7. The record shows that the notice was issued for the month of July, 2017 to March, 2018, to which reply was submitted. The record further shows that on 11.04.2023, the notice in ASMT – 10 under Rule 99 of the CGST Rules was issued directing the petitioner to file reply on or before 26.04.2023 on the discrepancies detected during the scrutiny of returns. No compliance was made to the said notice. The respondent no. 1, on 17.09.2023, issued notice under section 73 of the GST Act proposing to impose tax of Rs. 20,71,67,168/-, along with interest under section 50 of the GST Act as well as penalty of Rs. 2,07,16,715/-, in which date was fixed for submission of reply by 10.10.2023 and the date of personal hearing was fixed for the same date and thereafter, on 02.11.2023, a reminder was sent granting time to file reply and attend the personal hearing on or before 09.11.2023. The petitioner submitted reply seeking further time for addressing the issues raised in the show cause notice, but without issuing any further notice of fixing the date, an ex parte order was passed on 29.12.2023 conforming the demand of tax, interest and penalty, against which the petitioner preferred an appeal.
8. The record further shows that in the show cause notice under section 73 of the GST Act as well as the reminder, the date for submission of reply and personal hearing was fixed on the same date. The Commissioner of Commercial Tax issued an Office Memo No. 1406 dated 12.01.2024 clearly stating therein the date of submission of reply and personal hearing cannot be on the same date. This Court in Bharat Mint & Allied Chemicals Vs. CCT [(2022) 59 GSTL 394 All.], B.L. Pahariya Medical Store Vs. State of U.P. [(2023) 99 GST 653 (All.)], MSQ Steel Private Limited Vs. Deputy Commissioner & Another [Writ Tax No. 1687/2024, decided on 15.10.2024] and Aman Traders Vs. Deputy Commissioner & Another [Writ Tax No. 349/2024, decided on 12.03.2024] has held that a person/assessee is not required to request for oppotunity of personal hearing and it remained mandatory upon the Assessing Authority to afford such opportunity before passing an adverse order. Reference may be had to the judgements of the Apex Court in Nelson Motis Vs. Union of India [(1992) 4 SCC 711] and State Bank of India Vs. Rajesh Agarwal & Others [(2023) 6 SCC 1],.
9. Further, the first appellate court, without recording its own reason, has dismissed the appeal. The Apex Court in Shukla & Brothers (supra) has specifically held that absence of reason assigned, violates the principles of natural justice.
10. In view of the aforesaid facts & circumstances of the case, the impugned orders cannot be sustained in the eyes of law. The matter requires reconsideration.
11. For the said purpose, the impugned orders are hereby quashed.
12. The matter is remanded back to the Joint Commissioner, State Tax, Gautam Buddha Nagar, i.e., the respondent no. 1, for deciding the issue afresh in accordance with law after granting due opportunity of hearing to all the stake holders.
13. The writ petition is, accordingly, allowed.
