The main legal point established in the judgment is the mandatory requirement of providing an opportunity for personal hearing as mandated by Section 75(4) of the UPGST Act, 2017, in upholding principles of natural justice and fairness in tax and penalty determinations.

JUDGMENT :

1. Heard counsel appearing on behalf of the parties.

2. This is a writ petition under Article 226 of the Constitution of India wherein the petitioner M/s K.J. Enterprises is aggrieved by the order dated September 26, 2022, passed by the Additional Commissioner, Grade – 2, (Appeals – 1st), Commercial Tax, Agra (hereinafter referred to as the ‘Respondent No. 2’).

3. Factual matrix of the instant case is provided below:

a. Petitioner is a proprietorship firm carrying the business of job work of scrap, selling, and purchasing of iron machinery parts and hardware.

b. The petitioner, during the month of March 2018, purchased inputs from different registered firms, in which ITC claim was made as per the Uttar Pradesh Goods and Services Tax Act, 2017 (hereinafter referred to as the ‘UPGST Act, 2017’).

c. The petitioner also made transactions in the year 2019-20 and in this regard, bills were issued, in which details of the goods were mentioned.

d. On July 24, 2019, an inspection was carried out at the premises of the petitioner and at the time of inspection, the authorities asked the petitioner to deposit the amount in DRC – 03.

e. Thereafter, a summon was issued to the petitioner under Section 70 of the UPGST Act, 2017 directing the petitioner to appear before the concerned authority on August 13, 2019, at 11:00 am along with stock register and other relevant documents for verification.

f. A show cause notice was also issued by the respondents on July 22, 2020, under Section 74 of the UPGST Act, 2017 for tax period 2019-20, alleging that the petitioner wrongly availed input tax credit amounting to INR 22,00,00,000/-against bogus tax invoices and utilized the same by fraud or misstatement, suppression of facts, etc.

g. Another notice was issued on September 17, 2020, directing the petitioner to furnish a reply on October 6, 2020. Petitioner thereafter furnished reply on October 1, 2020.

h. Deputy Commissioner, State Tax, Sector – 4 (hereinafter referred to as the ‘Respondent No. 3’) rejected the reply of the petitioner vide order dated August 10, 2021, passed under Section 74 of the UPGST Act, 2017 for the A.Y. 2019-20 and imposed tax and penalty, along with interest, upon the petitioner amounting to INR 6,78,12,667.92/-.

i. The petitioner preferred an appeal before the Respondent No. 2 against the aforesaid order passed by the Respondent No. 3. By an order dated September 26, 2022, the Respondent No. 2 upheld the order of Respondent No. 3, and imposed tax and penalty on the petitioner.

4. Without delving into the merits of the instant case, it is crystal clear that an opportunity of ‘personal hearing’ was not afforded to the petitioner which is a mandatory requirement under Section 75(4) of the UPGST Act, 2017 which has been extracted below:

“75(4) 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.” (emphasis added)

5. Even if no request is received from the person chargeable with tax or penalty, an opportunity of personal hearing must be granted if any adverse decision is contemplated against such person.

6. When the word ‘or’ is used in a statute, it serves as a disjunctive conjunction, 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. Attempting to read “or” as “and” in a statute would fundamentally alter its meaning and undermine the legislative intent behind its use. Such an interpretation would impose stricter criteria or conditions than intended by the statute, potentially leading to absurd or unreasonable