Facts of the Case

The petitioner, M/S Jps Buildtech Private Limited, challenged an order dated 18.08.2023 passed by the Deputy Commissioner, State Tax, Sector-9, Meerut, for the tax period 2020-21, raising a demand in excess of Rs. 54,76,018, including a disputed tax and penalty component of about Rs. 26 lakh. A show cause notice was issued to the petitioner on 14.07.2023 calling for a reply by 14.08.2023; the petitioner's reply was placed on record before the assessment order was passed on 18.08.2023. The petitioner's sole ground before the Division Bench of the Allahabad High Court was that no personal hearing had been afforded before the adverse order was passed, contrary to Section 75(4) of the U.P. GST Act, 2017.

Issues Involved

  1. Whether Section 75(4) of the U.P. GST Act mandates a personal hearing before passing an adverse assessment order, irrespective of whether the assessee affirmatively requested one.
  2. What effect, if any, an assessee's selection of "No" against the personal-hearing option in the online reply has on this statutory obligation.
  3. The consequence of denial of a hearing opportunity on an assessment order creating heavy civil liability.

Petitioner's Arguments

  • Relying on the coordinate bench ruling in Bharat Mint & Allied Chemicals v. Commissioner Commercial Tax and the Gujarat High Court's ruling in Hitech Sweet Water Technologies, submitted that the Assessing Authority was bound to afford an opportunity of personal hearing before passing an adverse assessment order.
  • The assessment order raised a disputed demand of about Rs. 26 lakh and was wholly adverse to the petitioner, making the absence of a hearing opportunity contrary to settled law.

Respondent's Arguments

  • The State respondents did not press any distinct ground resisting the petitioner's submission on the mandatory nature of the personal hearing; the matter proceeded largely on examination of Section 75(4) itself.

Court Order/Findings

  • The Division Bench agreed with the coordinate bench in Bharat Mint & Allied Chemicals that an assessee is not required to specifically request a personal hearing; it remains mandatory for the Assessing Authority to afford such opportunity whenever an adverse decision is contemplated under Section 75(4), and that an assessee marking "No" against the personal-hearing option carries no legal consequence.
  • Especially where an assessment order creates heavy civil liability, observing even this minimal opportunity of hearing is a must, in keeping with principles of natural justice.
  • The impugned order dated 18.08.2023 was set aside; the matter was remitted to the Deputy Commissioner, State Tax, Sector-9, Meerut, with a direction to issue a fresh notice within two weeks; the petitioner undertook to appear and cooperate for expeditious conclusion of proceedings.

Important Clarification

The obligation under Section 75(4) of the GST Act to grant a personal hearing before an adverse assessment or demand order arises automatically whenever an adverse decision is contemplated against the person concerned — it does not depend on the assessee having affirmatively opted for a personal hearing in an online reply form. A "No" selected against that option does not waive the statutory right, particularly where the resulting demand involves substantial civil liability.

Sections Involved

  • Section 75(4), CGST/UPGST Act, 2017 — mandates an opportunity of hearing where a request is received in writing or where any adverse decision is contemplated against the person chargeable with tax or penalty.

Decision – In Favour of

The decision is in favour of the Assessee. The Division Bench allowed the writ petition, set aside the assessment order raising a demand of over Rs. 54 lakh, and remitted the matter for fresh proceedings preceded by a mandatory personal hearing, though the merits of the underlying tax demand itself remain to be freshly decided.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: High Court of Judicature at Allahabad
  • Case No.: WRIT TAX No. 1278 of 2023
  • CNR: 2023:AHC:213332-DB
  • Coram: Hon'ble Chief Justice Pritinker Diwaker and Hon'ble Justice Ashutosh Srivastava
  • Decision Date: 7 November 2023
  • Disposal Nature: Allowed; assessment order set aside and remitted

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