Case Law Details
Manas Traders Devi Vs State of U.P. (Allahabad High Court)
The Allahabad High Court considered a writ petition challenging an adverse order passed under the U.P. GST Act, 2017 on the ground that no opportunity of personal hearing had been granted to the petitioner before passing the order.
The Court noted that Section 75(4) of the U.P. GST Act mandates that an opportunity of personal hearing must be provided before any adverse decision is taken against a registered person.
In the present case, a notice had been issued to the petitioner under Section 73(1) of the Act calling for a reply. However, the notice did not propose any personal hearing. Against the columns meant for the date, time, and venue of personal hearing, the abbreviation “NA” (Not Applicable) had been mentioned.
The Court observed that the admitted position on record clearly showed that no opportunity of oral hearing had been granted to the petitioner. According to the Court, the notice merely called upon the petitioner to submit a written reply.
The Court held that even if the petitioner had failed to submit a written reply, such failure could only result in closure of the opportunity to file the written response. It could not deprive the petitioner of the independent statutory right of oral hearing provided under Section 75 of the Act.
The judgment emphasized that the principles of natural justice incorporated in the statute impose two separate procedural requirements: submission of a written reply and grant of oral hearing. These requirements must be satisfied independently, and failure to avail one opportunity cannot lead to denial of the other.
The petitioner also submitted that detailed clarification regarding discrepancies in returns could have been provided during the oral hearing if such opportunity had been granted.
Considering these facts, the High Court held that the impugned order had been passed contrary to the mandatory procedure prescribed under the statute. The procedural defect was found to be self-evident and material to the outcome of the proceedings.
Accordingly, the Court set aside the order dated February 21, 2023 and remitted the matter to the assessing authority for fresh adjudication. The petitioner was permitted to file a final reply to the show-cause notice within two weeks. The Court further directed that the petitioner be allowed to appear before the assessing authority on the date fixed, after which a fresh reasoned order may be passed. The writ petition was allowed.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Having heard Manish Kumar Shukla, learned counsel for the petitioner and Sri Sanjay Sarin, learned Additional Chief Standing Counsel appearing on behalf of the State, we find that as per Section 75 (4) of the U.P. G.S.T. Act, 2017 (hereinafter referred to as ‘the Act’) opportunity of personal hearing has to be granted before any adverse decision is taken against any person, here a registered person/petitioner.
2. Undeniably, the notice issued to the petitioner under Section 73(1) of the Act, which did intend to call for a reply from the petitioner but did not propose to grant personal hearing as the abbreviation “NA” was specified against the column “date of personal hearing”. In that against the columns to specify the date of personal hearing, time of personal hearing and venue for personal hearing, the abbreviation “NA” i.e. ‘Not Applicable’ was recorded.
3. In view of the above position admitted on the record, the only conclusion possible to be drawn is that the petitioner was never afforded any opportunity of personal hearing.
4. Thus, upon service of notice, the petitioner had been called to file its reply only. Consequently, non-compliance of that show cause notice may have only led to closure of opportunity to submit written reply. However, by virtue of the express provision of Section 75 of the Act, even in that situation the petitioner did not lose its right to participate at oral hearing and establish at that stage itself that the adverse conclusions proposed to be drawn against the petitioner, may be dropped.
5. In other words, the rules of natural justice as are ingrained in the statute prescribe dual requirement. First with respect to submission of written reply and the second with respect to oral hearing. Failure to avail one opportunity may not lead to denial of the other. The two tests have to be satisfied independently.
6. On merits, learned counsel for the petitioner further states that detailed reply was not required. The discrepancies in the returns as noticed by the adjudicating authority would have been clarified if opportunity of personal hearing had been granted.
7. In view of the above noted facts and reasons, we find no useful purpose may be served in keeping this petition pending or calling counter affidavit at this stage or to relegate the present petitioner to the forum of alternative remedy. The order impugned has been passed contrary to the mandatory procedure. The deficiency of procedure is self apparent and critical to the out-come of the proceedings.
8. Accordingly, the impugned order dated February 21, 2023 is set aside. Matter is remitted to the respondent No.3 to pass a fresh order. In that regard the petitioner may file its final reply to the show cause notice within two weeks from date. Thereafter, the petitioner may appear before the assessing authority on the date fixed by the assessing authority, whereafter the assessing authority may pass appropriate reasoned order.
Accordingly, the writ petition is allowed.
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