S.75(4) CGST | Allahabad HC Directs Commissioner To Take Disciplinary Action Against Adjudicating Authorities Violating PONJ Without Justifiable Reasons

While dealing with the non-compliance of mandatory provision for opportunity of hearing under Section 75(4) of the Central Goods and Services Tax Act, 2017, the Allahabad High Court directed the Commissioner, Commercial Tax, Uttar Pradesh to take remedial action, including disciplinary proceedings against erring adjudicating authorities for violating principles of natural justice without justifiable reasons.

An order under Section 74(9) (Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized by reason of fraud or any willful- misstatement or suppression of facts) of the CGST Act was passed by Deputy Commissioner, Commercial Tax Department, Sikandrabad, Bulandshahar which was challenged by the petitioner on grounds of violation of mandatory provision of Section 75(4) as not opportunity of hearing was provided to the petitioner.

Section 75(4) of the CGST Act provides that where an assesee requests for an opportunity of hearing in writing or any adverse decision is contemplated against him, an opportunity of hearing shall be granted to such assesee.

The bench comprising of Justice Saumitra Dayal Singh and Justice Donadi Ramesh held

“It is basic to procedural law under taxing statutes that opportunity of personal hearing must be provided to an assessee before any assessment/adjudication order is passed against him. Thus, we find it strange and wholly unacceptable merely because the substantive law has changed, the revenue authorities have changed their approach and are failing to observe that mandatory requirement of procedural law. They have thus denied opportunity of hearing to the assessee.”

The Court observed that Commissioner, Commercial Tax had issued an Office Memo to all Additional Commissioners requiring them to separate the date of reply and passing orders. However, it has been directed that the order under Section 73, 74, etc. must be passed on the date of the personal hearing itself.

The Court held that opportunity of personal hearing was mandatory if adverse order was sought to be passed against an assesee. The Court held that ex-parte orders could only be passed if the assesee had waived the right to personal hearing.

The Court held that since there was gross violation of principles of natural justice, the bar of alternate remedy was not applicable. The Court remitted the case back to the Deputy Commissioner for fresh consideration after providing an opportunity of personal hearing to the petitioner.

The Court proposed to impose heavy cost on the Deputy Commissioner, Commercial Tax Department, Sikandrabad, Bulandshahar for violation of principles of natural justice. However, deferred it upon assurance given by the Additional Chief Standing Counsel that such instances will not be repeated in future.

Case Title: Ns Agro And Engineering Products v. State of U.P. and Another [WRIT TAX No. - 672 of 2024]

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