Case Law Details
K.J. Enterprises Vs State of U.P. And Others (Allahabad High Court)
Introduction: In a significant decision, the Allahabad High Court, in the case of K.J. Enterprises vs. State of U.P., emphasized the mandatory nature of personal hearings in tax cases under Section 75(4) of the UPGST Act, 2017. The petitioner, a proprietorship firm engaged in scrap job work and machinery parts trading, challenged an order imposing tax and penalties. The court’s ruling sheds light on the importance of procedural fairness and adherence to natural justice.
Detailed Analysis: The petitioner’s grievance arose from the order passed by the Additional Commissioner, Grade – 2, (Appeals – 1st), Commercial Tax, Agra. The court examined the factual matrix, including the petitioner’s business activities, purchase of inputs, and subsequent tax-related proceedings. The inspection, summon, and show-cause notices issued by tax authorities culminated in the imposition of tax and penalty by the Deputy Commissioner, State Tax.
Crucially, the court highlighted Section 75(4) of the UPGST Act, which mandates a personal hearing when an adverse decision is contemplated, irrespective of whether a formal request is made by the person liable for tax or penalty. The court, drawing on legal precedents, emphasized the disjunctive nature of “or” in the statute, allowing for flexibility in granting a personal hearing.
The court cited earlier decisions in Bharat Mint and Allied Chemicals and Mohini Traders, reinforcing the necessity of providing an opportunity for personal hearing as a fundamental aspect of procedural fairness. The court rejected the argument that marking “NO” for personal hearing in the application could justify denial of this essential right.
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