Facts of the Case

M/S S.A. Traders, Lucknow, through its proprietor Sanjay Agarwal, challenged an order dated 05.07.2023 passed by the Deputy Commissioner, State Tax, Sector-17, Lucknow, for the tax period 2021-22, raising a demand exceeding Rs.65,284,344 (with disputed tax of about Rs.19 lakh being specifically highlighted). The petitioner's sole ground was that the show cause notice dated 20.03.2023 itself marked 'NA' against the columns for date, time and venue of personal hearing, thereby denying any opportunity of oral hearing before the adverse assessment order was passed, contrary to Section 75(4) of the UP GST Act, 2017.

Issues Involved

  1. Whether Section 75(4) of the UP GST Act mandates a personal hearing before passing an adverse assessment order, irrespective of whether the assessee specifically requested one.
  2. Whether marking 'NA' against the personal hearing columns in the notice, without an express request from the assessee, could be treated as compliance with Section 75(4).
  3. Whether the assessment order raising a substantial disputed demand could stand despite this procedural infirmity.

Petitioner's Arguments

  • Section 75(4), as interpreted by a coordinate bench in Bharat Mint & Allied Chemicals vs. Commissioner Commercial Tax & Ors., mandates that the Assessing Authority afford a personal hearing before passing an adverse order, regardless of whether the assessee requested one.
  • The assessment order, raising a disputed demand of about Rs.19 lakh, was wholly adverse and hence attracted the mandatory hearing requirement; its absence rendered the order contrary to law.
  • Reliance was also placed on the Gujarat High Court's decision in M/S Hitech Sweet Water Technologies Pvt. Ltd. vs. State of Gujarat in support of the mandatory hearing requirement.

Respondent's Arguments

  • The State's standing counsel did not seriously contest the settled legal position but left the matter to the Court's consideration on the facts of the notice issued.

Court Order/Findings

  • The Court agreed with the coordinate bench ruling in Bharat Mint & Allied Chemicals, holding that Section 75(4) of the UP GST Act mandatorily requires an opportunity of personal hearing before an adverse order is passed, and that an assessee's failure to affirmatively request a hearing (or a 'No' marked against the choice) carries no legal consequence in displacing this mandatory duty.
  • Given the heavy civil liability created by the assessment order, observing even minimal opportunity of hearing was found essential to natural justice and to enable a properly reasoned order.
  • The impugned order dated 05.07.2023 was set aside, and the matter remitted to the Deputy Commissioner, State Tax, Sector-17, Lucknow, 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

Under Section 75(4) of the UP GST Act (and parallel CGST provisions), a personal hearing must be granted before any adverse order is passed, whether or not the assessee affirmatively requested one — marking 'NA' or 'No' against the hearing option in the notice does not discharge the Assessing Authority's mandatory obligation, and failure to do so vitiates the resultant order regardless of the quantum of demand.

Sections Involved

  • Section 75(4), UP GST Act, 2017 — mandates an opportunity of hearing where a written request is received or where any adverse decision is contemplated against the person.
  • Central Goods and Services Tax Act, 2017 — the parallel central enactment containing an identically worded Section 75(4).

Decision – In Favour of

The decision favours the Assessee: the writ petition was allowed, the adverse assessment order was set aside for denial of mandatory personal hearing, and the matter was remitted for fresh proceedings after due notice and hearing.

Related Case Laws

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

Case Details

  • Court: High Court of Judicature at Allahabad, Lucknow Bench
  • Case No.: WRIT TAX No. 205 of 2023
  • CNR: Not available (Neutral Citation No. 2023:AHC-LKO:67481-DB)
  • Coram: Hon'ble Vivek Chaudhary, J. and Hon'ble Manish Kumar, J.
  • Decision Date: 16-10-2023
  • Disposal Nature: Allowed; remitted

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