UPGST | Opportunity Of Hearing Mandatory Under S75(4) Before Imposing Tax/Penalty: Allahabad High Court

The Lucknow Bench of the Allahabad High Court held that before passing of any adverse order, such as imposing tax or penalty, opportunity of hearing is mandatory under Section 75(4) of the Uttar Pradesh Goods and Service Tax Act, 2017.

Section 75(4) of the UPGST Act provides that an opportunity of hearing must be granted if requested in writing or where any adverse action is contemplated against such person.

Petitioner was issued show cause notices asking it to show cause as to why tax and penalty should not be imposed upon it. Petitioner submitted reply to the show cause notice, however, mistakenly marked "NO" for opportunity of hearing. Thereafter, orders were passed imposing tax and penalty on the petitioner.

Counsel for petitioner submitted that this error was due to some technical glitch/mistake on the portal. It was argued that Section 75(4) mandates that opportunity of hearing be provided to the petitioner. It was also argued that the orders were passed a day prior to the date fixed. Reliance was placed on the judgment of the Allahabad High Court in M/s. Mohini Traders vs. State of U.P. and another and Bharat Mint & Allied Chemicals Vs. Commissioner, Commercial Tax & others.

The Court observed that Section 75(4) of the UPGST Act specifically states 'or where any adverse decision is contemplated against such person'.

The bench comprising of Justice Vivek Chaudhary and Justice Om Prakash Shukla held

“Since in the present cases, both tax and penalty are imposed against the petitioners and admittedly, an adverse decision is contemplated against the petitioners, therefore, under Section 75(4) of the Act of 2017, an opportunity of hearing was mandatorily required to be given by the department to the petitioners and merely marking the same as "NO" in the option cannot entitle the department to pass an order without giving any opportunity or even without waiting for the petitioners to appear on the date fixed.”

The Court held that similar view had been taken by a coordinate bench in M/s. Mohini Traders vs. State of U.P. and another.

Accordingly, the orders were quashed with the liberty to the department to proceed afresh from the stage of providing opportunity of hearing to the petitioner.

Case Title: M/S Primeone Work Force Pvt. Ltd. Thru. Its Auth. Signatory Alok Kumar v. Union Of India Thru. Secy. Ministry Of Finance (Deptt. Of Revenue) New Delhi And Others 2024 LiveLaw (AB) 49 [WRIT TAX No. - 4 of 2024]

Case Citation: 2024 LiveLaw (AB) 49

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