Facts of the Case

M/S Brijesh Kumar Singh challenged an order dated 26.12.2022 passed by the Deputy Commissioner, State Tax, Sector-1, Raebareli, raising a demand exceeding Rs.7,81,494/- in the order (with the petitioner's counsel referencing an adverse demand of about Rs.19 lakhs) for the tax period March 2020, under the U.P. GST Act, 2017. The only notice issued was dated 24.11.2022, seeking reply within 30 days; notably, the Assessing Authority had itself marked 'NA' against the columns for date, time and venue of personal hearing in the notice, thereby foreclosing any hearing opportunity at the outset.

Issues Involved

  1. Whether marking the personal hearing fields as 'not applicable' in the show cause notice amounts to a denial of the mandatory hearing required under Section 75(4) before an adverse GST order.

Petitioner's Arguments

  • The Assessing Authority had, from the very outset, chosen not to give any opportunity of oral hearing by marking 'NA' against the date, time and venue of personal hearing in the notice, thereby completely denying the petitioner an oral hearing.
  • Relying on Section 75(4) of the U.P. GST Act as interpreted in Bharat Mint & Allied Chemicals v. Commissioner Commercial Tax, and the Gujarat High Court's decision in M/S Hitech Sweet Water Technologies, personal hearing was mandatory before any adverse order.

Respondent's Arguments

  • The State's Standing Counsel did not dispute the facts regarding the notice or the sequence of dates as placed before the Court.

Court Order / Findings

  • Section 75(4) mandates an opportunity of hearing be granted on request or wherever an adverse decision is contemplated, and the coordinate bench ruling in Bharat Mint & Allied Chemicals squarely applied.
  • An Assessing Authority cannot pre-empt the mandatory personal hearing requirement under Section 75(4) by marking the hearing-related columns in its own notice as 'not applicable'; such a foreclosure of the hearing opportunity at the threshold is itself a violation of natural justice for an order creating heavy civil liability.
  • The impugned order was set aside, and the matter remitted to the Deputy Commissioner, State Tax, Sector-1, Raebareli, with a direction to issue a fresh notice within two weeks and afford proper hearing before concluding proceedings.

Important Clarification

  • Where the department's own notice pre-emptively marks the personal hearing date, time and venue as 'not applicable,' this itself amounts to a denial of the mandatory hearing under Section 75(4) of the GST Act, independent of any conduct by the assessee, and vitiates the resulting adjudication order.

Sections Involved

  • Section 75(4), CGST/UP GST Act, 2017 - mandatory personal hearing before an adverse order.

Decision – In Favour of

The writ petition was allowed in favour of the Assessee, with the demand order set aside and remitted for fresh notice and hearing.

Case Details

Court: Allahabad High Court, Lucknow Bench
Case No.: Writ Tax No. 198 of 2023 (Neutral Citation 2023:AHC-LKO:65205-DB)
Coram: Justice Vivek Chaudhary and Justice Manish Kumar
Date of Order: 09.10.2023

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