Facts of the Case

The petitioner, M/S Gaurav Enterprizes, was aggrieved by an order dated 4 February 2023 raising a GST liability under Section 74 of the Goods and Services Tax Act. The order impugned had been passed pursuant to a show cause notice issued on 9 October 2022. Notably, the show cause notice contained the stipulation "NA" in the column requiring specification of the date of personal hearing, effectively denying the petitioner any indicated opportunity of oral hearing. The petitioner filed Writ Tax No. 1181 of 2023 before the High Court of Judicature at Allahabad, contending that no opportunity of hearing had otherwise been afforded, rendering the impugned order unsustainable. The petitioner relied on an earlier Division Bench decision of the same Court in M/S Mohini Traders v. State of U.P. (Writ Tax No. 551 of 2023, decided on 3 May 2023), which in turn followed the precedent in Bharat Mint & Allied Chemicals v. Commissioner Commercial Tax on the mandatory nature of personal hearing under Section 75(4) of the UP GST Act. The matter was heard by a Division Bench comprising Justice Ashwani Kumar Mishra and Justice Syed Aftab Husain Rizvi, and decided on 13 October 2023.

Issues Involved

  1. Whether a show cause notice that leaves the "date of personal hearing" column marked "NA" amounts to denial of the mandatory opportunity of personal hearing under Section 75(4) of the UP GST Act, 2017.
  2. Whether an assessment order raising heavy tax liability, passed under Section 74 of the GST Act without affording personal hearing, can be sustained.
  3. Whether the facts of the present case were squarely covered by the earlier ruling in M/S Mohini Traders v. State of U.P.

Petitioner's Arguments

  • No opportunity of personal hearing was afforded in the proceedings, as the show cause notice itself specified "NA" against the date of personal hearing.
  • Reliance was placed on the coordinate Bench decision in M/S Mohini Traders v. State of U.P., which held, following Bharat Mint & Allied Chemicals v. Commissioner Commercial Tax, that personal hearing under Section 75(4) of the UP GST Act is mandatory whenever an adverse decision is contemplated, irrespective of whether the assessee specifically requested it.
  • The facts of the present case were identical to those in Mohini Traders, and the petition ought to be disposed of on the same terms.

Respondent's Arguments

  • Learned counsel for the Department did not dispute that the issues raised in the writ petition were squarely covered by the adjudication made in Writ Tax No. 551 of 2023 (Mohini Traders).
  • No independent ground was pressed to distinguish the present case from the precedent relied upon by the petitioner.

Court Order/Findings

  • The Court noted that the Department's counsel conceded the issues were squarely covered by the ruling in M/S Mohini Traders v. State of U.P.
  • Following Section 75(4) of the UP GST Act, 2017 and the binding precedent that personal hearing is mandatory before passing an adverse order irrespective of any request by the assessee, the Court held that denial of personal hearing vitiated the impugned order.
  • The petition was disposed of in terms of the order passed in Writ Tax No. 551 of 2023, and the impugned order dated 4 February 2023 was quashed.
  • The authorities were granted liberty to issue a fresh notice specifying the date of hearing and to proceed in accordance with law.

Important Clarification

Under Section 75(4) of the UP GST Act, 2017, personal hearing must be afforded to an assessee before an adverse order is passed, whether or not the assessee has specifically requested such hearing. A show cause notice that marks the date of personal hearing as "NA" fails to meet this mandatory requirement, and any consequent order is liable to be set aside for violation of natural justice.

Sections Involved

  • Section 74 of the Central Goods and Services Tax Act, 2017 / UP Goods and Services Tax Act, 2017 — determination of tax involving fraud or wilful misstatement.
  • Section 75(4) of the UP Goods and Services Tax Act, 2017 — mandatory opportunity of personal hearing before an adverse decision.

Decision – In Favour of

The decision favours the Assessee. The impugned demand order was quashed for want of mandatory personal hearing, with liberty to the Department to issue a fresh notice specifying the hearing date and proceed afresh in accordance with law.

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.1181 of 2023
  • CNR: Not available
  • Coram: Justice Ashwani Kumar Mishra and Justice Syed Aftab Husain Rizvi
  • Decision Date: 13 October 2023
  • Disposal Nature: Writ petition disposed of, order quashed

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