Facts of the Case

The petitioner challenged the assessment order dated 13.09.2022, passed under Section 74 of the CGST/UPGST Act, 2017, on the ground that the statutory requirement of granting a personal hearing had not been complied with.

After receiving the Show Cause Notice dated 17.12.2021, the petitioner submitted a detailed reply on 23.12.2021 in Form GST DRC-06 and specifically opted for a personal hearing by selecting the relevant option in the prescribed form.

Despite this request, no date, time, or venue for personal hearing was communicated before passing the assessment order.

The department contended that the notice dated 17.12.2021 was merely a reminder notice and that no further opportunity of hearing was required since the petitioner had not responded to an earlier notice dated 27.08.2020.

Issues Involved

  1. Whether granting a personal hearing under Section 75(4) of the CGST/UPGST Act is mandatory when the assessee requests such hearing.
  2. Whether an assessment order passed under Section 74 without granting the requested personal hearing violates the principles of natural justice.
  3. Whether the existence of an appellate remedy under Section 107 bars the High Court from exercising writ jurisdiction where there is a violation of natural justice.

Petitioner's Arguments

  • The petitioner submitted a reply to the Show Cause Notice in Form GST DRC-06 and expressly requested a personal hearing.
  • No notice specifying the date, time, or venue of the hearing was ever communicated before passing the assessment order.
  • The assessment order was passed in complete violation of Section 75(4) of the CGST/UPGST Act.
  • Reliance was placed upon the decision in Bharat Mint and Allied Chemicals vs Commissioner Commercial Tax & Others, wherein the Allahabad High Court held that personal hearing under Section 75(4) is mandatory whenever requested or where an adverse order is contemplated.
  • Since the assessment order violated the principles of natural justice, the writ petition was maintainable despite the availability of an appellate remedy.

Respondent's Arguments

  • The department argued that the Show Cause Notice dated 17.12.2021 was only a reminder to the earlier notice issued on 27.08.2020.
  • Since the petitioner had allegedly failed to respond to the earlier notice, no further opportunity of personal hearing was required before passing the assessment order.
  • Accordingly, the assessment proceedings were claimed to be valid.

Court Order / Findings

The Allahabad High Court allowed the writ petition and held that:

  • Section 75(4) clearly mandates that an opportunity of personal hearing must be granted whenever:
    • the taxpayer requests such hearing; or
    • an adverse decision is proposed against the taxpayer.
  • Even if no request is made, where an adverse order is contemplated, granting a personal hearing remains mandatory.
  • The Show Cause Notice itself mentioned "NA" against the date, time, and venue of personal hearing. Therefore, no effective opportunity of hearing was ever provided.
  • The petitioner had independently requested a personal hearing while filing Form GST DRC-06, yet the authority failed to provide one before passing the assessment order.
  • The denial of personal hearing amounted to a clear violation of Section 75(4) and the principles of natural justice.
  • The availability of an alternative remedy under Section 107 cannot prevent the High Court from exercising jurisdiction under Article 226 where there is a gross violation of natural justice.
  • Consequently, the assessment order dated 13.09.2022 was declared illegal and was set aside.
  • The matter was remanded to the Proper Officer to pass a fresh order after granting a proper opportunity of personal hearing to the petitioner.

Important Clarification

  • Personal hearing under Section 75(4) is mandatory whenever requested by the taxpayer.
  • Even without a request, if an adverse order is proposed, the authority must provide an opportunity of personal hearing.
  • Mentioning "NA" for the date, time, and venue of hearing does not satisfy the statutory requirement.
  • Orders passed in violation of Section 75(4) are liable to be quashed for breach of natural justice.
  • The availability of an appellate remedy does not bar the High Court from entertaining a writ petition where there is a clear violation of the principles of natural justice.
  • This judgment reinforces the principle laid down in Bharat Mint and Allied Chemicals vs Commissioner Commercial Tax & Others regarding the mandatory nature of personal hearing under Section 75(4).

Sections Involved

  • Section 74 of the CGST Act, 2017 / UPGST Act, 2017
  • Section 75(4) of the CGST Act, 2017 / UPGST Act, 2017
  • Section 107 of the CGST Act, 2017
  • Article 226 of the Constitution of India

Link to download the order - https://mytaxexpert.co.in/uploads/1782889278_203compressed.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.