S75(4) UPGST | 'Or' Is Disjunctive In Nature, Each Option To Be Considered Independently: Allahabad High Court

The Allahabad High Court has held that the use of word 'or' in Section 75(4) of Uttar Pradesh Goods and Service Tax Act, 2017 is disjunctive in nature which means that there are two situations provided in which opportunity of personal hearing must be afforded to an assesee and both situations must be considered independently while applying Section 75(4).

Section 75(4) of Uttar Pradesh Goods and Service Tax Act, 2017 contemplates that an opportunity of personal hearing must be given to an assesee if he so requests in writing “OR” any adverse decision is contemplated against such assesee.

“When the word 'or' is used in a statute, it serves as a disjunctive con- junction, indicating two or more alternatives. Each option presented is to be considered independently. It is crucial to recognize that the disjunctive nature of “or” precludes its interpretation as a conjunctive conjunction, such as “and”. Unlike, “and”, which implies a requirement for the simultaneous fulfilment of multiple conditions, “or” allows for flexibility and choice by permitting compliance with any one of the alternatives presented,” held Justice Shekhar B. Saraf.

The Court held that reading “or” as “and” in a provision would alter the meaning and intent of the legislature in using “or” leading to stricter enforcements or law and unintended and absurd outcomes.

The Court relied on Commissioner of Sales Tax, Uttar Pradesh v. The Modi Sugar Mills Ltd. wherein the Supreme Court had held that equitable considerations do not find a place in interpretation of taxation statutes. It was held that tax provisions must be interpreted in light of what is expressed.

The Court held that the use of “or” indicated that the intention of the legislature was to provide two scenarios where opportunity of personal hearing must be given to an assesee: one, where there is a request in writing from such person; second, where any adverse decision is contemplated against such person.

“The inclusion of “or'' in Section 75(4) of the UPGST Act, 2017, emphasizes the dual nature of the obligation to provide a personal hearing, accommodating both proactive requests from individuals seeking to defend their interests and reactive responses to adverse orders contemplated by tax authorities. In either scenario, the statutory mandate remains clear: the individual must be afforded an opportunity for personal hearing before any final determination is made regarding tax or penalty imposition.”

The Court held that opportunity of personal hearing being provided in the statute acknowledges the complexities of such cases where intricate issues of facts and law are involved and must be decided based on comprehensive understanding of the circumstances involved.

The Court relied on the decision of the Allahabad High Court in M/s Primeone Work Force Pvt. Ltd. v. Union of India, Mohini Traders v. State of U.P. and Others and Bharat Mint and Allied Chemicals v. Commissioner Commercial Tax and Others wherein it has been held that opportunity of personal hearing is mandatory when any adverse order or penalty is sought to be imposed on an assesee even if he has not requested for such opportunity in writing.

Petitioner approached the High Court against the order under Section 74 which was passed without an opportunity of personal hearing. Petitioner had deposited 10% of the disputed tax liability at the time of filing appeal, however, the appellate authority partly allowed the appeal confirming the levy made by the Department based on the documents seized during survey proceedings.

Since the appellate authority failed to notice this flaw in the order passed by the Department, the Court set aside the order of the appellate authority as well as the order passed by the Department with a direction that the petitioner be given an opportunity of personal hearing.

Case Title: M/S Shree Sai Palace vs. State Of U.P. And Others 2024 LiveLaw (AB) 171 [WRIT TAX No. - 50 of 2023]

Case Citation: 2024 LiveLaw (AB) 171

Counsel for Petitioner: Shubham Agrawal

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