Case Law Details
Siddh Sales Corporation Vs State of UP and 2 Others (Allahabad High Court)
Introduction: In the legal battle between M/S Siddh Sales Corporation and the State of Uttar Pradesh (UP), the former contested an adjudication order, citing its ex-parte nature under Section 73 of the UP GST Act, 2017. Allegations of improper notice and lack of a hearing prior to the order’s issuance formed the crux of the petitioner’s argument.
Fact of the case: M/S Siddh Sales Corporation challenged an adjudication order, alleging its ex-parte nature, under Section 73 of the UP GST Act, 2017, read with Rule 142(5) of the Rules framed thereunder. The petitioner contended that they were not provided with proper notice to file a reply, nor were they served with a prior notice of the hearing before the impugned order was passed.
Court Finding: Upon reviewing the submissions, the court required the learned Standing Counsel to obtain written instructions. Although earlier instructions suggested that the impugned order was passed after affording due opportunity to the petitioner, further scrutiny revealed irregularities in the proceedings. The order sheet displayed deficiencies, including missing entries of hearing dates and a lack of communication of notices to the petitioner.
Acknowledging the gravity of adjudication orders and their potential civil consequences, the court deemed the proceedings conducted by the respondent authorities as wholly irregular and contrary to the provisions of law. Consequently, the court set aside the impugned order and provided directions for the petitioner to treat it as a final show-cause notice, allowing them to furnish a detailed reply within two weeks.
Furthermore, the court instructed respondent no. 2 to schedule a fresh date of hearing with proper notice, emphasizing the importance of procedural fairness. The decision underscored the necessity of affording respondents a fair opportunity to present their case before adjudicating authorities to prevent frivolous and avoidable litigation.
Lastly, the court directed that a copy of the order be communicated to respondent no. 3 for taking corrective measures, including appropriate action regarding the conduct exhibited by respondent no. 2 during the proceedings.
Conclusion: The court’s ruling highlighted the significance of procedural fairness and adherence to statutory requirements in adjudication proceedings. By setting aside the ex-parte order and providing directions for a fair hearing, the court ensured that the principles of natural justice were upheld, safeguarding the rights of the petitioner and promoting transparency in legal processes.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Heard Sri Yashonidhi Shukla, learned counsel for the petitioner and Sri Ankur Agarwal, learned counsel for the revenue.
2. Challenge has been raised to the adjudication order dated 23.02.2024 passed under Section 73 of the UP GST Act, 2017 read with Rule 142(5) of the Rules framed thereunder.
3. Primarily, challenge raised is to the ex parte nature of the order. It has been urged, no proper notice to file reply and in any case, no prior notice of hearing was served to the petitioner before the impugned order came to be passed.
4. On such submissions we had required the learned Standing Counsel to obtain written instructions. Earlier, instructions had been obtained indicating that the impugned order had been passed after affording due opportunity to the petitioner. Hence, on 09.04.2024 we had passed the below quoted order :
“1. Sri Ankur Agarwal, learned Standing Counsel relies on the written instructions received by him. Copy of the same has been has been marked as ‘X’ and retained on record. It reveals, opportunity of hearing was given to the petitioner. The written instructions further records that appropriate entries are recorded on the order sheet.
2. Put up as fresh on 16.04.2024 to enable learned Standing Counsel to produce a copy of the order sheet.”
5. Today, Sri Ankur Agarwal, learned Standing Counsel has produced a copy of the order sheet of the case leading to the impugned order. The same has been marked as ‘XX’ and retained on record. Perusal of the order sheet reveals, prior to 20.07.2023 the petitioner had participated in the proceedings with respect to verification of the return under Section 67 of the Act.
6. On 20.07.2023, notice under Section 73(1) of the Act was issued. On that, the date fixed was 19.08.2023. There is no order sheet entry of the date 19.08.2023. Instead one day earlier, on 18.08.2023, the order sheet records, the case was adjourned on the request of the petitioner for the next date fixed 07.09.2023. At the same time, there is no noting made on the order sheet by the petitioner or its counsel.
7. Those deficiencies apart, more critically there is no order sheet entry of the next date fixed 07.09.2023. Again, three days before the date fixed on 04.09.2023, the order sheet records that counsel for the petitioner appeared and produced the ledger for the period 2021-22. That order sheet entry is disclosed to be noted by the counsel for the petitioner on the date 04.09.2023. At the same time, no further date was fixed either on 04.09.2023 or 07.09.2023. No other notice is disclosed to have been issued to the petitioner for any other date of proceedings. At the same time, on 08.11.2023, the order sheet record, the petitioner submitted its reply on DRC-06. Again, no date of hearing was fixed or recorded on the order sheet. Almost three months thereafter on 23.02.2024 the order sheet records that the impugned order was passed.
8. While there can be no dispute to the fact that the proceedings conducted by the respondent authorities are wholly irregular and contrary to the provisions of law and ex parte, without issuance of any notice to the petitioner and without communication of any date of hearing fixed in the proceedings, we have made detailed note of the order sheet to record the wholly unacceptable conduct of the respondent authority in proceeding in the manner in which he has.
9. Adjudication orders give rise to serious civil consequences. They create demands of tax as also penalties are often imposed. In the self assessment scheme, unless the noticee/assessee is given fair opportunity to furnish its reply and to present his case before the adjudicating authority the adjudication orders may only give rise to frivolous and wholly avoidable litigation contrary to the statutory scheme itself.
10. Accordingly, in the present facts, no useful purpose may be served in keeping the present petition pending or calling for counter affidavit at this stage. Present writ petition is disposed of with the following directions :
(i) The impugned order dated 23.02.2024 is set aside.
(ii) The petitioner may treat the impugned order to be a final show-cause notice and furnish its detailed reply within a period of two weeks from today.
(iii) Subject to such compliance made by the petitioner, respondent no.2 may fix a fresh date of hearing with proper notice in the manner prescribed.
(iv) After hearing the parties, appropriate reasoned order may be passed dealing with the objections raised by the petitioner.
11. Let a copy of this order be communicated to respondent no.3 for taking all corrective measures including appropriate corrective action with respect to the conduct offered by respondent no.2.
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