Vedika Guest House Vs State of U.P. And 2 Others (Allahabad High Court)
Allahabad High Court has set aside an appellate order that upheld a tax liability, interest, and penalty against Vedika Guest House, a partnership engaged in the guest house business under the Goods and Services Tax (GST) Act, 2017. The court emphasized that personal hearings are not mere formalities and that a party must be adequately notified and afforded an opportunity to present its case.
The petitioner approached the High Court challenging an appellate order dated August 22, 2024, passed by the Additional Commissioner Grade II. The core of the petitioner’s grievance was that the initial assessment order, imposing tax liability for the relevant financial year under Section 74 of the GST Act, was entirely ex-parte. The guest house asserted that neither the alleged show cause notice (GST DRC-01) nor any other proceedings were brought to its knowledge through physical service or direct email communication. The petitioner only became aware of the proceedings and the order after it was uploaded to the GST dashboard under the “view additional notices and orders” tab, long after the prescribed deadlines for response.
Two-Fold Grievance of the Petitioner
Vedika Guest House presented a two-pronged argument before the High Court:
1. Denial of Opportunity: The primary contention was that in the absence of proper service of the show cause notice, the petitioner was denied a fundamental opportunity to present its defense and justify its non-liability for tax on its trading and sale activities under GST.
2. Denial of Appellate Remedy: The subsequent appeal filed by the petitioner against the ex-parte assessment order was dismissed by the first appellate authority solely on the grounds of being time-barred. The petitioner argued that this delay was solely due to its lack of knowledge of the original proceedings and order, thereby rendering it remediless.
The petitioner’s counsel, Sri Shubham Agrawal, further highlighted that no actual opportunity for a personal hearing was provided by the Assessing Authority, with the record simply indicating “NA” (not applicable) for such a hearing. He argued that even if there was non-compliance with a show cause notice (which the petitioner disputed receiving properly), it would only lead to the closure of the opportunity to submit a written reply, not the loss of the right to an oral hearing as per Section 75 of the Act.
