Case Law Details
Chaudhary Associates Vs State of U.P. (Allahabad High Court)
Allahabad High Court, in Chaudhary Associates vs. State of U.P., quashed a GST demand order issued under Section 73 of the State Goods and Services Tax (SGST) Act. The petitioner had challenged the order dated December 22, 2023, as well as the subsequent appellate order dated August 30, 2024, which dismissed their appeal on grounds of limitation. The primary argument raised by the petitioner was that no opportunity for a personal hearing was provided before the order was passed.
The Court observed that the records clearly indicated the absence of a hearing, as the official communication to the petitioner merely stated “N.A.” in the column for the hearing date. This omission was found to be a violation of Section 75(4) of the GST Act, which mandates that an opportunity for a personal hearing must be granted before an adverse decision is made. The Court also noted that the lack of a hearing contravened principles of natural justice, which require a fair opportunity to be heard before an order imposing tax liability is finalized.
Citing precedents, including Party Time Hospitality Prop. Punita Gupta Lko. v. State of U.P. & Ors. (Writ Tax No. 176 of 2023), the Court reiterated that compliance with Section 75(4) is mandatory. In similar cases, courts have consistently held that failure to provide a hearing renders an order legally unsustainable. The judgment underscores the importance of procedural fairness in tax proceedings, ensuring that taxpayers are not denied their statutory rights.
Consequently, both the demand order and the appellate order were set aside. The matter was remanded to the Assessing Authority with instructions to pass a fresh order after granting the petitioner an opportunity for a hearing. The decision reinforces the principle that tax authorities must adhere strictly to procedural requirements while adjudicating GST liabilities.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Heard learned counsel for the parties and perused the record.
2. The present petition has been filed by the petitioner challenging the order dated 22.12.2023 whereby an order under Section 73 of the State Goods & Service Tax Act against the petitioner as well as the order dated 30.08.2024 whereby the appeal preferred by the petitioner was dismissed as being beyond limitation.
3. Confining his argument, the counsel for the petitioner argues that no date of hearing was fixed nor any hearing granted to the petitioner prior to passing of an order under Section 73 of the State Goods & Service Tax Act.
4. Learned Standing counsel based upon the documents states that a communication sent to the petitioner as against the date of hearing, N.A. was transcribed.
5. Thus, prima facie, from the said communication as well as the from the impugned order, it is evident that no hearing was accorded to the petitioner prior to passing of an order under Section 73 of the State Goods & Service Tax Act, which is a clear violation of Section 75(4) of the GST Act and also in violation of the principle of nature justice. Thus on the said limited ground, both the impugned orders are quashed and the matter is remanded to the Assessing Authority to pass a fresh order after giving opportunity of hearing to the petitioner in accordance with law.
6. The petition is disposed of finally in terms of the above.
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