Facts of the Case

The petitioner, M/S Mohini Traders, challenged an assessment order dated 25.11.2022 passed by the Assistant Commissioner, State Tax, Sector-6, Aligarh, for the tax period April 2018, raising a demand in excess of Rs.3 crore. The sole notice issued to the petitioner, dated 21.10.2022, sought a reply within 30 days but marked "NA" against the columns for date, time and venue of personal hearing, meaning the Assessing Authority had, at the notice stage itself, chosen not to offer an oral hearing. The petitioner's reply was received on 14.11.2022 and the adverse order followed just eleven days later, on 25.11.2022.

Issues Involved

  1. Whether an assessment order passed under the U.P. GST Act, 2017, is sustainable where the preceding notice marked the personal-hearing columns as "NA", denying the assessee any opportunity of oral hearing before an adverse order creating heavy civil liability.

Petitioner's Arguments

  • Relying on Bharat Mint & Allied Chemicals v. Commissioner, Commercial Tax (2022) 48 VLJ 325, it was argued that Section 75(4) of the Act obliges the Assessing Authority to grant a personal hearing before passing any adverse order, regardless of whether the assessee specifically requested one.
  • The demand of about Rs.3 crore was wholly adverse to the petitioner, making the absence of a hearing opportunity fatal to the order.
  • Reliance was also placed on the Gujarat High Court's decision in M/S Hitech Sweet Water Technologies Pvt. Ltd. v. State of Gujarat, 2022 UPTC (Vol. 112) 1760.

Respondent's Arguments

  • The petitioner had tick-marked "No" against the option for personal hearing in the online reply to the show-cause notice, and having thereby declined the opportunity of hearing, could not now complain of any error in the consequent order.

Court Order / Findings

  • Section 75(4) of the U.P. GST Act, 2017 provides that a hearing shall be granted where a written request is received or where any adverse decision is contemplated — the latter limb operates independently of any request by the assessee.
  • Agreeing with the coordinate bench in Bharat Mint & Allied Chemicals, the Court held that it is mandatory for the Assessing Authority to afford a personal hearing before passing an adverse order, and the assessee's own tick-mark declining a hearing carries no legal consequence once an adverse order is contemplated.
  • Given the heavy civil liability involved, minimal opportunity of hearing is a must to ensure a reasoned order and a better appreciation of the case at the appellate stage.
  • The assessment order dated 25.11.2022 was set aside and the matter remitted to the Assistant Commissioner, State Tax, Sector-6, Aligarh, to issue a fresh notice within two weeks, with the petitioner undertaking to appear on the next date fixed so proceedings conclude expeditiously.
  • The writ petition was allowed.

Important Clarification

Under Section 75(4) of the CGST/State GST Act, an assessee's own choice — such as ticking "No" for personal hearing in an online reply — does not dispense with the Assessing Authority's independent, mandatory obligation to grant a hearing wherever an adverse decision is contemplated. A notice pre-marking the hearing columns as "NA" effectively pre-empts this statutory safeguard and renders the resulting order liable to be set aside, irrespective of how the assessee responded to the notice.

Sections Involved

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

Decision – In Favour of

In favour of the Assessee — the assessment order was set aside for denial of the mandatory personal hearing, though the matter is remitted for a fresh, properly conducted assessment, leaving the underlying tax demand open for fresh adjudication.

Case Details

High Court of Judicature at Allahabad (Chief Justice's Court); Writ Tax No.550 of 2023; Coram: Hon'ble Pritinker Diwaker, Chief Justice, and Hon'ble Saumitra Dayal Singh, J.; Order dated 03.05.2023; CNR not indicated on the order copy.

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