Facts of the Case

The petitioner, M/S Dana Pani, challenged an order dated 23.03.2022 passed by the Assistant Commissioner, State Tax, Sector-1, Gorakhpur, for the tax period 2018-19, raising a demand of over Rs.19,06,242/-. The sole notice issued to the petitioner, dated 06.04.2021, sought a reply within 30 days but expressly recorded "NA" against the columns for date, time, and venue of personal hearing, indicating that no oral hearing opportunity was afforded at the outset.

Issues Involved

  1. Whether an assessing authority is obliged to grant an opportunity of personal hearing under Section 75(4) of the U.P. GST Act, 2017 even where the assessee has not specifically requested one.
  2. Whether the assessment order raising a substantial demand, passed without such hearing, was liable to be set aside.

Petitioner's Arguments

  • The petitioner argued that no personal hearing was ever afforded, relying on the coordinate bench decision in Bharat Mint & Allied Chemicals v. Commissioner Commercial Tax and the Gujarat High Court's ruling in M/S Hitech Sweet Water Technologies Pvt. Ltd. v. State of Gujarat, both holding personal hearing mandatory before an adverse order under equivalent GST provisions.

Respondent's Arguments

  • The State's counsel did not dispute the facts regarding the notice but relied on the show-cause notice format, where the petitioner had reportedly not indicated a request for personal hearing.

Court Order / Findings

  • The Division Bench held itself bound by, and in complete agreement with, the coordinate bench's view in Bharat Mint & Allied Chemicals that personal hearing under Section 75(4) is mandatory once an adverse decision is contemplated, irrespective of whether the assessee ticked a box requesting one.
  • The Court held that the fact that the petitioner may have marked "No" (or the column was left blank) against personal hearing bears no legal consequence, and that observing at least minimal opportunity of hearing is a must before an assessment order creating heavy civil liability.
  • The impugned order was set aside and the matter remitted to the Assistant Commissioner to issue a fresh notice within two weeks, with the petitioner undertaking to appear on the next date fixed.

Important Clarification

  • Under Section 75(4) of the U.P. GST Act (and its pari materia CGST equivalent), an opportunity of personal hearing must be granted whenever an adverse decision is contemplated against the taxable person — this obligation is not contingent on the assessee affirmatively requesting a hearing, and a notice that pre-emptively marks "NA" against the hearing columns cannot excuse the authority from this mandatory requirement.
  • This principle is now well settled across multiple High Courts and applies with particular force where the assessment creates a substantial civil liability.

Sections Involved

  • Section 75(4) of the U.P. GST Act, 2017 - mandates an opportunity of hearing where a request is made in writing or where any adverse decision is contemplated against the person.

Decision – In Favour of

The writ petition was allowed in favour of the Assessee; the assessment order was set aside and the matter remitted for a fresh notice and hearing.

Case Details

High Court of Judicature at Allahabad, Writ Tax No. 1010 of 2023, Neutral Citation 2023:AHC:171807-DB; Coram: Hon'ble Pritinker Diwaker, Chief Justice, and Hon'ble Ashutosh Srivastava, J.; decided on 25 August 2023.

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