Ved Enterprises Vs State of U.P. (Allahabad High Court)
The Allahabad High Court considered a writ petition challenging an order dated 24 April 2024 passed under the U.P. GST Act, 2017. The Court examined whether the petitioner had been afforded the mandatory opportunity of personal hearing contemplated under Section 75(4) before an adverse decision was taken.
The Court noted that the notice issued under Section 74 called upon the petitioner to submit a reply. However, the reminder notice recorded “NA” (Not Applicable) against the columns relating to the date, time and venue of personal hearing. The Court therefore concluded that the petitioner had never been afforded an opportunity of personal hearing.
The Court held that failure to respond to the notice could result only in closure of the opportunity to submit a written reply. It could not extinguish the separate right to participate in an oral hearing, which Section 75 expressly required before an adverse decision. According to the Court, the statutory procedure incorporates two independent requirements—submission of a written reply and personal hearing—and failure to avail one opportunity does not result in denial of the other.
On merits, the petitioner’s counsel submitted that a detailed written reply was not required and that the discrepancies in the returns noticed by the adjudicating authority could have been clarified if a personal hearing had been granted.
The High Court found that the impugned order had been passed contrary to the mandatory procedure and that the procedural deficiency was apparent and critical to the outcome. It therefore considered it unnecessary to keep the petition pending, call for a counter affidavit, or relegate the petitioner to the alternative remedy.
The Court set aside the order dated 24 April 2024 and remitted the matter to Respondent No. 2 for a fresh order. The petitioner was permitted to file its final reply to the show-cause notice within two weeks, after which the petitioner could appear before the assessing authority on the date fixed by that authority. The assessing authority was thereafter directed to pass an appropriate reasoned order. The writ petition was accordingly allowed.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Having heard Sri Mukesh Kumar Tewari, learned counsel for the petitioner and Sri Sanjai Sarin, learned Counsel for the State-respondents/ revenue, 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 74 of the Act, which did intend to call for a reply from the petitioner but the reminder notice 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 meant 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 24.04.2024 is set aside. Matter is remitted to the respondent No. 2 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, where after the assessing authority may pass appropriate reasoned order.
9. Accordingly, the writ petition is allowed.
