Facts of the Case

The petitioner, M/s Paras Industrial Sales through its Proprietor, challenged the assessment order dated 06.09.2022, as rectified on 13.09.2022, passed under Section 74 of the CGST/UPGST Act, 2017.

The petitioner submitted that upon receipt of the show cause notice dated 17.12.2021, it filed a detailed reply on 23.12.2021 through Form GST DRC-06 and expressly opted for a personal hearing by selecting the prescribed option. Despite this request, the adjudicating authority neither communicated the date, time, nor venue of the hearing and proceeded to pass the assessment order, thereby violating the statutory mandate under the GST law.

Issues Involved

  1. Whether an adjudicating authority is mandatorily required to grant a personal hearing under Section 75(4) of the CGST/UPGST Act, 2017 when the assessee requests one.
  2. Whether an assessment order passed under Section 74 without granting the requested personal hearing is legally sustainable.
  3. Whether the High Court can entertain a writ petition despite the availability of an appellate remedy under Section 107 where there is a violation of the principles of natural justice.
  4. Whether denial of a personal hearing renders the assessment order liable to be set aside.

Petitioner's Arguments

  • The petitioner contended that it had filed a reply to the show cause notice within the prescribed time through Form GST DRC-06.
  • It specifically requested a personal hearing, making it obligatory for the department to provide an opportunity before passing any adverse order.
  • No date, time, or venue of hearing was ever communicated.
  • Therefore, the assessment order was passed in violation of Section 75(4) and the principles of natural justice and deserved to be quashed.

Respondents' Arguments

  • The Revenue submitted that the notice dated 17.12.2021 was merely a reminder to an earlier notice dated 27.08.2020.
  • Since the petitioner had allegedly failed to respond to the earlier notice, the department argued that no further opportunity of personal hearing was required.
  • Accordingly, the assessment proceedings were claimed to be valid.

Court Order / Findings

The Allahabad High Court held that Section 75(4) of the CGST/UPGST Act, 2017 makes it mandatory for the adjudicating authority to grant a personal hearing whenever:

  • the taxable person requests such hearing; or
  • an adverse decision is proposed against the taxpayer.

The Court observed that although the show cause notice mentioned that the petitioner could appear for a personal hearing, the columns specifying the date, time, and venue of the hearing were marked "NA", thereby depriving the petitioner of an effective opportunity of hearing.

The Court further held that the petitioner had expressly opted for a personal hearing while filing Form GST DRC-06, and therefore the department was statutorily required to provide the same before passing the assessment order.

Relying upon the decision in Bharat Mint and Allied Chemicals vs Commissioner Commercial Tax & Others, the Court reiterated that violation of Section 75(4) amounts to a breach of the principles of natural justice. Consequently, the availability of an alternative remedy under Section 107 does not bar the exercise of writ jurisdiction under Article 226.

Accordingly, the assessment order dated 06.09.2022, as rectified on 13.09.2022, was set aside, and the matter was remanded to the adjudicating authority for passing a fresh order after granting the petitioner a proper opportunity of personal hearing.

Important Clarification

  • Personal hearing under Section 75(4) is mandatory where requested by the taxpayer or where an adverse order is proposed.
  • Merely issuing a show cause notice without specifying the date, time, and venue of hearing does not satisfy the statutory requirement.
  • Violation of Section 75(4) constitutes a violation of the principles of natural justice.
  • The High Court may entertain a writ petition despite the existence of an alternative remedy where mandatory procedural safeguards are breached.
  • Assessment orders passed without complying with Section 75(4) are liable to be quashed and remanded for fresh adjudication.

Sections Involved

  • Section 74 – Determination of Tax Not Paid or Short Paid by Reason of Fraud, Wilful Misstatement or Suppression of Facts.
  • Section 75(4) – Opportunity of Personal Hearing.
  • Section 107 – Appeals to Appellate Authority.
  • Article 226 of the Constitution of India – Writ Jurisdiction of High Courts.

Link to download the order - https://mytaxexpert.co.in/uploads/1782890285_208compressed.pdf

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