Prem Traders Vs State of U.P (Allahabad High Court)
The Allahabad High Court (Lucknow Bench), in the case of Prem Traders v. State of Uttar Pradesh, quashed an order issued under Section 73 of the Central Goods and Services Tax Act, 2017. The court found that no opportunity for a personal hearing was provided to Prem Traders, the assessee, before the impugned order dated April 29, 2024, was passed. The facts presented revealed that the order itself indicated the absence of a hearing, and no specific date was fixed for a hearing, with the same date designated for both filing objections and the hearing. This procedural flaw led Prem Traders to challenge the order via a writ petition.
The High Court observed that the method of fixing the date for the hearing contradicted the CBIC Master Circular dated March 10, 2017. Furthermore, the court relied on its own Division Bench judgment in Mahaveer Trading Company v. Deputy Commissioner, State Tax and Another, which dealt with an identical procedural issue. Consequently, the court held that the impugned order was invalid and remanded the matter back to the Assessing Authority. The directive was to conduct a fresh adjudication in accordance with the law, ensuring that Prem Traders received a meaningful opportunity for a hearing. This decision underscores the importance of Section 75(4) of the CGST Act, which mandates an opportunity for a hearing when an adverse decision is contemplated against a person or when a written request for such a hearing is received. The court’s ruling in M/s Mohini Traders v. State of Uttar Pradesh and Another further affirmed that a personal hearing is mandatory before an adverse order is passed, irrespective of whether the assessee explicitly requested it.
Facts:
Prem Traders (“the Petitioner”) filed a writ petition under Article 226 of the Constitution, challenging the Order dated April 29, 2024 (“the Impugned Order”) issued under Section 73 of the CGST Act.
The Impugned Order itself showed that the same has been passed without giving opportunity of hearing to the Petitioner. Further, no specific date for hearing was fixed, in fact the same date was fixed for filing objection and for hearing.
Hence, aggrieved by the Impugned Order, the Petitioner filed the present writ petition.
Issue:
Whether personal hearing is mandatory before passing the order?
Held:
The Hon’ble Allahabad High Court (Lucknow Bench) in W.P. (T) Nos. 261/2025 held as under:
- Observed that, the manner of fixing date is against CBIC Master Circular bearing No. F.No. 96/1/2017 dated March 10, 2017 (“the Circular”), issued by the Department itself.
- Relied on, the Division Bench judgment in Mahaveer Trading Company v. Deputy Commissioner, State Tax and Another [Writ Tax No.303 of 2024 dated March 04, 2024], wherein an identical procedural infirmity was squarely covered.
- Held that, the Impugned Order was liable to be quashed, and the matter was remanded to the Assessing Authority for fresh adjudication by law, after providing the petitioner with a meaningful opportunity of hearing.
Our Comments:
Section 75(4) of the CGST Act governs “General provisions relating to determination of tax”. Further, Section 75(4) of the CGST Act states 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.
In pari materia case of M/s Mohini Traders v. State of Uttar Pradesh and Another [Writ Tax No. 551 of 2023 dated May 03, 2023], the Hon’ble Allahabad High Court held that once it has been laid down by way of a principle of law that a person 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.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. No one appears on behalf of the petitioner on account of a strike call hence, the matter is being decided with the assistance of the learned Standing Counsel.
2. The present petition has been filed challenging the order impugned dated 29.04.2024 passed under Section 73 of the GST Act.
3. The order impugned itself shows that the same has been passed without giving opportunity of hearing to the petitioner.
4. Learned Standing Counsel based upon the instructions states that no specific date for hearing was fixed in fact same date was fixed for filing objection and for hearing.
5. The manner of fixing the date is against the circular issued by the department itself and also the matter is squarely covered by the judgment of the Division Bench of this Court in the case of Mahaveer Trading Company vs Deputy Commissioner State Tax and another: Writ Tax No.303 of 2024, decided on 04.03.2024.
6. In view thereof, the impugned order dated 29.04.2024 is quashed. The writ petition is allowed.
7. The matter is remanded back to the Assessing Authority to pass fresh order, in accordance with law, after providing adequate opportunity of hearing.
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