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"Follow Natural Justice Principles Contemplated U/S 75(4) CGST/ UPGST Act": Allahabad HC Directs UP Assessing Authorities
Sparsh Upadhyay
9 March 2022 5:57 PM IST
The Allahabad High Court has directed the Proper Officers/Assessing Authorities in the State of Uttar Pradesh to follow the principles of natural justice as contemplated under Section 75(4) of the Central Goods and Services Tax, 2017/ U.P. Goods and Services Tax, 2017.The Bench of Justice Surya Prakash Kesarwani and Justice Jayant Banerji observed thus in a Tax Writ filed by Bharat Mint...
The Allahabad High Court has directed the Proper Officers/Assessing Authorities in the State of Uttar Pradesh to follow the principles of natural justice as contemplated under Section 75(4) of the Central Goods and Services Tax, 2017/ U.P. Goods and Services Tax, 2017.
The Bench of Justice Surya Prakash Kesarwani and Justice Jayant Banerji observed thus in a Tax Writ filed by Bharat Mint And Allied Chemicals that had moved the Court after an assessment order was passed against it creating a demand of tax.
It was the contention of the petitioner that the impugned order of the Authority be set aside and be quashed as it had been made in gross violation of the principles of natural Justice and because no oral hearing in the matter was afforded to Petitioner.
It may be noted that Section 75(4) of the GST Act states that an opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person.
In this regard, the counsel for the petitioner submitted that the impugned assessment order creating demand of tax, interest, and penalty, had been passed without affording an opportunity of hearing contemplated in Section 75(4) of the Central Goods and Services Tax, 2017/ U.P. Goods and Services Tax, 2017.
Against this backdrop, at the outset, the Court formulated the following two questions for its consideration:
- Whether opportunity of personal hearing is mandatory under Section 75(4) of the CGST/UPGST Act 2017 ?
- Whether under the facts and circumstances of the case the impugned adjudication order has been passed in breach of the principle of natural justice and consequently it deserves to be quashed in exercise of powers conferred under Article 226 of the Constitution of India ?
The Court referred to Section 75(4) of the Act of 2017 to note that an opportunity of hearing has to be granted by authorities under the Act, 2017 where either a request is received from the person chargeable with tax or penalty for an opportunity of hearing or where any adverse decision is contemplated against such person.
Thus, the Court concluded that where an adverse decision is contemplated against the person, such a person even need not request for an opportunity of personal hearing and it is mandatory for the authority concerned to afford an opportunity of personal hearing before passing an order adverse to such person.
In view of this, the Court ruled that the legislative mandate of Section 75(4) of the Act to the authorities to afford opportunity of hearing to the assessee i.e. to follow principles of natural justice, had been completely violated by the respondents while passing the impugned order.
It may be noted that in this very matter, the Court, in one of its orders had observed that an opportunity of hearing has to be granted by authorities to a person against whom an adverse decision is contemplated under Section 75(4) of the Central Goods and Services Tax, 2017/ U.P. Goods and Services Tax, 2017.
Read more about the observations of the Court here: Right To Hearing Must Be Granted Where Adverse Order Is Contemplated Against A Person U/S 75 (4) CGST Act: Allahabad HC
Further, regarding the argument of the respondents in the counter affidavit that the writ petition is not maintainable as the petitioner has an alternative remedy of appeal under Section 107 of the Act, the Court observed that it is settled law that availability of alternative remedy is not a complete bar to entertain a writ petition under Section 226 of the Constitution of India.
Justifying the interference of the Court in exercise of its writ powers in the instant matter, the Court specifically remarked thus:
"Certain exceptions have been carved out by Hon'ble Supreme Court that a writ petition under Article 226 of the Constitution of India may be entertained even there is an alternative remedy. One of the principle in this regard is that if the order impugned has been passed in gross violation of principles of 4 natural justice. It is admitted case of the respondents that no opportunity of personal hearing, as contemplated under Section 75(4) of the Act, 2017, was afforded to the petitioner before passing the impugned order."
In view of these observations, the Court held that the impugned order dated 9.11.2021 under Section 74 of the Act for the tax period April (year 2019-20) can not be sustained and was thereby quashed.
Liberty was granted to the respondents to pass an order afresh in accordance with the law, after affording an opportunity of personal hearing to the petitioner and the Writ petition was allowed to this extent with a cost of Rs.10,000/-.
Case title - Bharat Mint And Allied Chemicals v. Commissioner Commercial Tax And 2 Others
Case Citation: 2022 LiveLaw (AB) 104
