Case Law Details
Chandani Tent Traders v. State of U.P. (Allahabad High Court)
Summary: In Chandani Tent Traders v. State of U.P. (Writ Tax No. 1084/2024), the Allahabad High Court ruled that passing an order without granting a hearing violates the principles of natural justice. The petitioner, whose GST registration was canceled, argued that they had not received any notice of the cancellation, which was done ex parte. The court held that such actions fail to meet the basic requirements of natural justice, referencing a prior ruling in Chemsilk Commerce (P.) Ltd vs. State of U.P., where a similar issue arose. In that case, it was determined that the onus is not on taxpayers to monitor GST portals for notices if no physical notice is issued. The impugned order was quashed, and the petitioner was granted an opportunity to be heard. The court emphasized the importance of procedural fairness, aligning its decision with precedents such as R.B. Traders v. Deputy Commercial Tax Officer by the Madras High Court. There, it was similarly held that denying an opportunity for personal representation violates natural justice. Following this rationale, the Allahabad High Court reiterated that orders passed without hearing affected parties are invalid. The decision underscores the judiciary’s role in ensuring procedural compliance in administrative actions and safeguarding taxpayer rights.
The Hon’ble High Court of Allahabad in the case Chandani Tent Traders v. State of U.P. [WRIT TAX NO. 1084/2024 dated July 23, 2024] it was held that passing a order without giving an opportunity of a hearing is a violation of principles of natural justice.
Facts
Chandani Tent Traders (“the Petitioner”) had their GST registration cancelled. The petitioner contended that the petitioner never received notice and the registration was cancelled ex parte and that was a violation of the principles of natural justice.
Issue
Whether passing an order without giving an opportunity of hearing a violation of principles of natural justice?
Held
The Hon’ble High Court of Allahabad held in WRIT TAX NO. 1084/2024 as under
- Relied upon Chemsilk Commerce (P.) Ltd vs State of U.P., in the case the petitioner sought revival of GST registration which was cancelled without giving the petitioner the opportunity of hearing. The order in this case was passed by ex parte hearing. It was held that it was not an obligation of the petitioner to upon the GST portal, along with this no physical notice was issued. It was held the principles of natural justice were not followed and hence quashed the order.
- Held that quashed the impugned order based on the above-mentioned judgement.
Our comments:
In R.B. Traders v. Deputy Commercial Tax Office, The Madras High Court ruled that it is against natural justice principles to issue an order without giving the parties involved a chance to hear it in person. As a result, the ruling was quashed and instructed to give the petitioner a chance to prove their case. The petitioner filed this writ petition to challenge the first respondent’s order dated April 1, 2024, and to demand the second and third respondents to defreeze the petitioner’s bank account. According to the petitioner, all notifications and correspondence were posted to the GST portal and the petitioner was not aware of the alerts posted on the GST portal since it was a small business concern. It was ruled that the respondent violated the natural justice principles by issuing the orders without giving the petitioner a chance for a face-to-face hearing. The petitioner claims that they have already paid the relevant body around 90% of the tax. Therefore, this Court believes that giving the Petitioner a chance to prove their case on the merits and in compliance with the law is both essential and reasonable.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Heard Shri Manish Gupta along with Shri Arjit Gupta, learned counsel for the petitioner and Shri Ankur Agrawal, learned Standing Counsel for the State.
2. Petitioner’s registration was cancelled on 18.11.2022. The same has never been revived. Thus, according to the petitioner no notice came to be served on the petitioner. The registration having been cancelled, the petitioner was not aware of issuance of such notice. Consequently, it was submitted that the adjudication proceedings was ex-parte.
3. In such circumstances, Writ Tax No.403 of 2024 (M/S Chemsik Commerce Pvt Ltd. Vs. State of U.P. and Another) has been disposed of by the following order dated 09.04.2024.
“1. Having heard Shri Shubham Agrawal, learned counsel for the petitioner and Sri Ankur Agarwal learned Standing Counsel for the respondents, it remains undisputed that the petitioner’s registration under the UPGST Act, 2017 was cancelled on 6.5.2019 w.e.f. 31.1.2019. It is not the case of the revenue that the said registration has ever been revived or that the petitioner ever sought revival of that registration.
2. In view of the above, it does merit acceptance that the petitioner was not obligated to visit the GST portal to receive the show cause notices that may have been issued to the petitioner for 2017-18 through e-mode, preceding the adjudication order dated 31.12.2023 passed in pursuance thereto.
3. It is also not the case of the revenue that any physical/offline notice was issued to or served on the petitioner before the impugned order came to be passed.
4. In view of peculiar facts noted above, no useful purpose may be served in keeping the petition pending or calling counter affidavit at this stage or to relegate the present petitioner to the forum of alternative remedy.
5. Since essential requirement of rules of natural justice has remained to be fulfilled, we set aside the order dated 31.12.2023. The petitioner may treat the said order itself to be the notice and submit its final reply thereto within a period of four weeks from today. Subject to such compliance by the petitioner, fresh order may be passed after affording opportunity of personal hearing, as expeditiously as possible, preferably within a period of three months therefrom.
6. Writ petition is accordingly disposed of.”
4. For reason of exact similarity of facts, the present writ petition is also disposed of on the same terms.
Order Date :- 23.7.2024
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