Compliance of Section 75(4) of GST Act is mandatory: Allahabad HC

Party Time Hospitality Prop. Smt. Punita Gupta Lko. Vs State Of U.P. Thru Prin. Secy. Tax And Registration Lko And 2 Others (Allahabad High Court)

The case of Party Time Hospitality Vs State of U.P. was heard by the Allahabad High Court, where the petitioner challenged the demand for tax and penalty under Section 74 of the GST Act. The petitioner had leased a party lawn on August 1, 2018, and was later issued a show-cause notice on September 28, 2021, for the period of July 2017 to March 2018. The notice, however, did not clearly state how Section 74 was invoked or provide the necessary details such as a personal hearing date, time, or venue. The petitioner did not respond to the notice, and as a result, the demand for tax and penalty was confirmed. The petitioner appealed the decision, but the appeal was dismissed on August 4, 2023, as it was filed beyond the prescribed period of limitation under Section 107 of the GST Act.

The petitioner argued that the demand notice lacked clarity regarding fraud or misrepresentation, and that no opportunity for a hearing was provided as required under Section 75(4) of the GST Act. Citing judgments in similar cases such as M/s Mohini Traders and M/s Lari Almirah House, where the court had ruled that an opportunity of hearing must be given even if a reply to the notice was not filed, the petitioner sought a review. The respondent contended that the petitioner failed to respond to the notice, and the appeal was rightly dismissed due to the delay. The High Court found that no hearing was provided, violating the principles of natural justice under the GST Act. The court set aside both the demand order and the appeal dismissal, remanding the matter to the respondents for a fresh hearing in accordance with the law.