Case Law Details
Sri Ganesh Sales Vs State of U.P. and Another (Allahabad High Court)
In the case of Sri Ganesh Sales vs. State of U.P. and Another, the Allahabad High Court quashed a GST order issued under Section 74 of the Uttar Pradesh Goods and Services Tax Act, 2017, for the tax period April 2020 to March 2021. The petitioner challenged the order on grounds of procedural violations, particularly the denial of a proper opportunity for a personal hearing. The Court noted that the adjudication process violated principles of natural justice, as highlighted in a prior case, Mahaveer Trading Company vs. Deputy Commissioner State Tax. Similar deficiencies, such as inadequate notice of hearings and improperly scheduled procedural steps, were observed in both cases.
The Court emphasized that any adverse order in adjudication proceedings must be preceded by a proper opportunity for personal hearing. If the taxpayer waives this right or fails to attend despite being given the opportunity, only then can an ex-parte decision be justified. Denying this fundamental right undermines the fairness of the process. Consequently, the Court annulled the impugned order and directed the tax authority to allow the petitioner to submit a fresh reply, schedule a proper hearing, and issue a reasoned decision within two months. This judgment underscores the importance of adhering to procedural fairness in GST adjudications.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. This is a writ petition under Article 226 of the Constitution of India wherein the writ petitioner is aggrieved by the order dated November 11, 2024 passed by the respondent No. 2 under Section 74 of the Uttar Pradesh Goods and Services Tax Act, 2017 for the Tax period April, 2020 to March, 2021 ( F.Y. 2020-21).
2. We have heard counsel appearing on behalf of the parties.
3. The factual matrix is such that the matter is squarely covered by a coordinate Bench judgment of this Court in Mahaveer Trading Company vs. Deputy Commissioner State Tax and another [(Writ Tax No.303 of 2024), Neutral Citation No.-2024:AHC:38820-DB]. Relevant portion of the aforesaid judgment is delineated below:-
“10. On query made, the learned Additional Chief Standing Counsel fairly submits, in light of similar occurrences, noticed in other litigation, he had apprised the Commissioner, Commercial Tax. In turn, the Commissioner, Commercial Tax, Uttar Pradesh, has issued Office Memo No. 1406 dated 12.1.2024. The same has been addressed to all Additional Commissioner to be communicated to all field formations for necessary compliance. A copy of the same has been made available to this Court. 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 personal hearing is 17.11.2023, then the date of order has to be 17.11.2023″
11. In view of the facts noted above, 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.
12. Thus, the impugned order cannot be sustained in the eyes of law. It has been passed in gross violation of fundamental principles of natural justice. The self imposed bar of alternative remedy cannot be applied in such facts. 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.”
4. Upon a perusal of record, it appears that the factual matrix is very similar to one in Mahaveer Trading Company’s (supra). We do not see any reason to take a different stand.
5. Accordingly, the impugned order dated 11.11.2024 passed by Deputy Commissioner, State Tax, Sector-2, Aligarh (Respondent No. 2) is quashed and set-aside with a direction given to the officer concerned to grant the petitioner another opportunity of filing a fresh reply and thereafter fix a date of hearing and pass a reasoned order. The entire exercise should be completed within a period of two months from date.
6. The writ petition is disposed of.
Author Bio
