Case Law Details
Dana Pani Vs State of U.P. (Allahabad High Court)
In a recent judgment, the Allahabad High Court, in the case of Dana Pani Vs. State of U.P., emphasized the significance of affording an opportunity for personal hearing to the assessee before passing an adverse tax assessment order. The court clarified that marking ‘No’ in the column meant to indicate the choice to avail personal hearing would have no legal consequence.
Detailed Analysis:
The case in question involved a challenge to an order issued by the Assistant Commissioner of State Tax, Sector-1, Gorakhpur, for the tax period 2018-19, which imposed a tax demand in excess of Rs. 19,06,242 on the petitioner. The petitioner’s primary contention was that they were denied the opportunity for oral hearing during the assessment process.
The petitioner’s argument was based on Section 75(4) of the U.P. GST Act, 2017, which stipulates that “an opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person.”
The High Court referred to a previous judgment and noted that the law clearly required the Assessing Authority to provide an opportunity for personal hearing, and this obligation did not depend on the assessee’s request. In other words, the mere indication of ‘No’ in the column meant to signify the choice for personal hearing by the assessee held no legal significance.
The judgment was also supported by a decision from the Gujarat High Court, reinforcing the importance of providing a hearing opportunity during the assessment process.
The High Court further emphasized that, particularly in cases involving substantial tax liabilities, it was imperative to ensure that the principle of natural justice was upheld. Providing an opportunity for personal hearing allowed the authority to pass a well-reasoned order and ensured that justice was served. This approach also facilitated a better understanding of the case for any future appeals.
Conclusion:
In light of the above analysis, the Allahabad High Court allowed the writ petition and set aside the impugned order dated March 23, 2022. The matter was remitted to the Assistant Commissioner, State Tax, Sector-1, Gorakhpur, with instructions to issue a fresh notice to the petitioner within two weeks. The petitioner committed to appearing before the authority on the next date fixed to conclude the proceedings as expeditiously as possible. This judgment serves as a significant reminder of the importance of providing a fair and just opportunity for personal hearing in tax assessment cases, promoting transparency and adherence to the principles of natural justice.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Heard Sri Aditya Pandey, learned counsel for the petitioner and Sri Ankur Agarwal, learned counsel for the revenue.
2. Challenge has been raised to the order dated 23.3.2022 passed by the Assistant Commissioner, State Tax, Sector-1, Gorakhpur for the tax period 2018-19, whereby demand in excess to Rs.19,06,242/- has been raised against the present petitioner.
3. Solitary ground being pressed in the present petition is, the only notice in the proceedings was issued to the petitioner on 06.04.2021 seeking his reply within 30 days. Referring to item no. 3 of the table appended to that notice, it has been pointed out, the Assessing Authority had at that stage itself chosen to not give any opportunity of hearing to the petitioner by mentioning “NA” against column description “Date of personal hearing”. Similar endorsements were made against the columns for “Time of personal hearing” and “Venue where personal hearing will be held”. Thus, it is the objection of learned counsel for the petitioner, the petitioner was completely denied opportunity of oral hearing before the Assessing Authority.
4. Relying on Section 75(4) of the U.P. GST Act, 2017 (hereinafter referred to as the ‘Act’) as interpreted by a coordinate bench of this Court in Bharat Mint & Allied Chemicals Vs. Commissioner Commerical Tax & 2 Ors., (2022) 48 VLJ 325, it has been then asserted, the Assessing Authority was bound to afford opportunity of personal hearing to the petitioner before he may have passed an adverse assessment order. Insofar as the assessment order has raised disputed demand of tax about Rs.19 lacs, the same is wholly adverse to the petitioner. In absence of opportunity of hearing afforded, the same is contrary to the law declared by this Court in Bharat Mint & Allied Chemicals (supra). Reliance has also been placed on a decision of the Gujarat High Court in M/S Hitech Sweet Water Technologies Pvt. Ltd. Vs. State of Gujarat, 2022 UPTC (Vol. 112) 1760.
5. Having hearing learned counsel for the parties and having perused the record, Section 75(4) of the Act reads as under :
“An opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person.”
6. We find ourselves in complete agreement with the view taken by the coordinate bench in Bharat Mint & Allied Chemicals (supra). Once it has been laid down by way of a principle of law that a person/assessee is not required to request for “opportunity of personal hearing” and it remained mandatory upon the Assessing Authority to afford such opportunity before passing an adverse order, the fact that the petitioner may have signified ‘No’ in the column meant to mark the assessee’s choice to avail personal hearing, would bear no legal consequence.
7. Even otherwise in the context of an assessment order creating heavy civil liability, observing such minimal opportunity of hearing is a must. Principle of natural justice would commend to this Court to bind the authorities to always ensure to provide such opportunity of hearing. It has to be ensured that such opportunity is granted in real terms. Here, we note, the impugned order itself has been passed on 23.03.2022. The stand of the assessee may remain unclear unless minimal opportunity of hearing is first granted. Only thereafter, the explanation furnished may be rejected and demand created.
8. Not only such opportunity would ensure observance of rules of natural of justice but it would allow the authority to pass appropriate and reasoned order as may serve the interest of justice and allow a better appreciation to arise at the next/appeal stage, if required.
9. Accordingly, the present writ petition is allowed. The impugned order dated 23.03.2022 is set aside. The matter is remitted to the respondent no.2/Assistant Commissioner, State Tax, Sector-1, Gorakhpur to issue a fresh notice to the petitioner within a period of two weeks from today. The petitioner undertakes to appear before that authority on the next date fixed such that proceedings may be concluded, as expeditiously as possible.
