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.
