Case Law Details
Munni Jeneral Store Vs State of U.P. And 2 Others (Allahabad High Court)
In Munni Jeneral Store vs. State of U.P. & Others, the Allahabad High Court addressed a writ petition challenging a GST assessment order dated April 16, 2024. The petitioner contended that the Assistant Commissioner, State Tax, Balia, raised a significant tax demand for the period April 2018 to March 2019 without providing an opportunity for a personal hearing. Despite a statutory mandate under Section 75(4) of the U.P. GST Act, 2017, the notice issued on December 20, 2023, did not include provisions for a hearing, marking “NA” in relevant columns for hearing details. The petitioner argued that this omission violated the principles of natural justice and was contrary to legal precedents set by the High Court in Bharat Mint & Allied Chemicals vs. Commissioner, Commercial Tax and by the Gujarat High Court in M/S Hitech Sweet Water Technologies Pvt. Ltd. vs. State of Gujarat.
The Revenue countered that the petitioner had declined a personal hearing by selecting “No” in the online reply to the show cause notice, thus forfeiting the right to such an opportunity. However, the Court rejected this argument, emphasizing that an opportunity for personal hearing is mandatory when an adverse decision with heavy civil liability is contemplated, irrespective of the petitioner’s initial response. The Court highlighted the principle established in Bharat Mint & Allied Chemicals, which states that authorities must ensure the opportunity for a hearing is real and substantive to uphold natural justice.
Setting aside the impugned order, the High Court remanded the case to the Assistant Commissioner with instructions to reissue a fresh notice and allow the petitioner a fair hearing. The decision underscores the judiciary’s commitment to procedural fairness in tax assessments involving significant liabilities.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Heard Ms. Vedika Nath, learned counsel for the assessee and Sri Ankur Agarwal, learned counsel for the revenue.
2. Challenge has been raised to the order dated April 16, 2024 passed by the Assistant Commissioner, State Tax, Sector-1, Balia for the tax period April 2018 to March 2019, whereby demand 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 December 20, 2023 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.1 crore, 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. On the other hand, learned counsel for the revenue would contend, the petitioner was denied opportunity of hearing because he had tick marked the option ‘No’ against the option for personal hearing (in the reply to the show-cause-notice), submitted through online mode. Having thus declined the opportunity of hearing, the petitioner cannot turn around to claim any error in the impugned order passed consequently.
6. Having heard 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.”
7. 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.
8. 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. 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.
9. 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.
10. Accordingly, the present writ petition is allowed. The impugned order dated April 16, 2024 is set aside. The matter is remitted to the respondent no.3 Assistant Commissioner, State Tax, Sector-1, Balia 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.
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