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Facts of the Case

M/S Dana Pani challenged an order dated 23.03.2022 passed by the Assistant Commissioner, State Tax, Sector-1, Gorakhpur, raising a demand exceeding Rs. 19,06,242/- for tax period 2018-19, before the Allahabad High Court. The sole ground pressed was that the only notice issued to the petitioner, dated 06.04.2021, had marked "NA" against the columns for date, time and venue of personal hearing, effectively denying any opportunity of oral hearing before the adverse assessment order was passed.

Issues Involved

  1. Whether Section 75(4) of the U.P. GST Act mandates that an opportunity of personal hearing be granted before passing an adverse order, even where the assessee has not specifically requested one.
  2. Whether marking "NA" against the personal-hearing columns in the notice, and proceeding to pass an adverse order without any hearing, violates this mandate.

Petitioner's Arguments

  • The petitioner relied on Section 75(4) of the U.P. GST Act and the Allahabad High Court's own decision in Bharat Mint & Allied Chemicals v. Commissioner Commercial Tax, arguing that a personal hearing must be granted before an adverse assessment order is passed, irrespective of whether the assessee specifically requested one.
  • It was submitted that marking "NA" against the date, time and venue of personal hearing in the notice itself demonstrated that the Assessing Authority had, from the outset, chosen not to afford any hearing.
  • Reliance was also placed on a Gujarat High Court decision, M/S Hitech Sweet Water Technologies Pvt. Ltd. v. State of Gujarat, on the same principle.

Respondent's Arguments

  • No specific counter-argument beyond supporting the impugned order's validity is recorded; the Revenue's counsel appeared and the matter was heard on the petitioner's limited procedural ground.

Court Order / Findings

  • The Division Bench agreed with the coordinate Bench's ruling in Bharat Mint & Allied Chemicals, holding that an assessee is not required to specifically request a personal hearing, and it remains mandatory upon the Assessing Authority to afford such an opportunity before passing an adverse order; marking "No" or "NA" against the hearing columns carries no legal consequence in displacing this mandatory requirement.
  • The Court emphasised that in the context of an assessment order creating heavy civil liability, observing at least minimal opportunity of hearing is essential to the principles of natural justice, and to enable a proper appreciation of the matter at any subsequent appellate stage.
  • The writ petition was allowed and the impugned order dated 23.03.2022 was set aside, with the matter remitted for a fresh notice and assessment, the petitioner undertaking to appear promptly so that proceedings could be concluded expeditiously.

Important Clarification

  • Section 75(4) of the U.P. GST Act imposes a mandatory duty on the Assessing Authority to grant a personal hearing before passing any adverse order — this obligation does not depend on the assessee having specifically requested a hearing, and a notice pre-marking the hearing columns as "NA" does not discharge this duty.
  • This principle applies with particular force to assessment orders creating heavy civil liability, since observance of a minimal hearing opportunity both satisfies natural justice and enables a more informed order, useful even at a later appellate stage.

Sections Involved

  • Section 75(4), U.P. GST Act, 2017 – mandates an opportunity of hearing where an adverse decision is contemplated, whether or not specifically requested.
  • Section 74, CGST/UP GST Act, 2017 – the substantive provision under which the underlying demand was raised (as evident from the tax-period assessment context).

Decision – In Favour of

The decision is in favour of the assessee. The assessment order was set aside for denial of the mandatory personal hearing under Section 75(4), and the matter remitted for a fresh notice and hearing.

Case Details

Court: Allahabad High Court
Case No.: Writ Tax No. 1010/2023
CNR / Citation: 2023:AHC:171807-DB
Coram: Hon'ble the Chief Justice Pritinker Diwaker and Hon'ble Mr. Justice Ashutosh Srivastava
Date of Order: 25 August 2023

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