Recently in the matter Ns Agro and Engineering Products Vs State of U.P. and Another in Appeal No. Writ Tax No. 672 of 2024, the Hon’ble Allahabad High Court, vide its order dated 16.05.2024, has slammed Deputy Commissioner, Commercial Tax Department, Sikandrabad, Bulandshahar and proposed to impose heavy costs for the conduct offered by Deputy Commissioner, Commercial Tax Department, Sikandrabad, Bulandshahar. The Hon’ble High Court has set aside the order dated 19.08.2021 passed by the Deputy Commissioner, Commercial Tax Department, Sikandrabad, Bulandshahar and matter has been remitted to the Deputy Commissioner, Commercial Tax Department, Sikandrabad, Bulandshahar to pass a fresh order, in accordance with law, after affording due opportunity of hearing to the petitioner. Further, a direction was given to the Commissioner, Commercial Tax, Uttar Pradesh to undertake remedial measures including providing for disciplinary proceedings against erring officials, where fundamental principles of natural justice may be violated by the adjudicating authorities, without justifiable reason.
It is to be noted that the same order was given earlier by the Hon’ble Allahabad High Court in the matter of Mahaveer Trading Company Vs Deputy Commissioner State Tax and another in in Appeal No. Writ Tax No. 672 of 2024, dated 04.03.2024.
The Hon’ble High Court noted that 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.
Thus, if any order has been passed without granting of opportunity of personal hearing to the taxpayer, then there shall be a gross violation of fundamental principles of natural justice. The self-imposed bar of alternative remedy of appeal under section 107 of the Act, cannot be applied in such case. 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.
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.
The Hon’ble High Court has also considered the Office Memo No. 1406 dated 12.11.2024 issued by the Commissioner, Commercial Tax, Uttar Pradesh. The same has been addressed to all Additional Commissioner to be communicated to all field formations for necessary compliance. 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 persona hearing is 17.11.2023, then the date of order has to be 17.11.2023″
Conclusion: The Allahabad High Court’s decision in the Ns Agro case serves as a stern reminder to tax authorities about the importance of adhering to natural justice principles. The ruling mandates the inclusion of personal hearings in the adjudicative process, emphasizing procedural fairness and accountability. This judgment is a significant step towards safeguarding taxpayers’ rights and ensuring a just and equitable tax administration system.
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