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2024 Supreme(All) 1965
IN THE HIGH COURT OF ALLAHABAD
VIVEK CHAUDHARY, OM PRAKASH SHUKLA, JJ.
M/S Primeone Work Force Pvt. Ltd. - Petitioner
Versus
Union of India and others - Respondents
WRIT TAX NO. - 4 OF 2024, WRIT TAX NO. - 5 OF 2024, WRIT TAX NO. - 6 OF 2024 AND WRIT TAX NO. - 7 OF 2024.
Decided On : 12-01-2024
For the Petitioner:Neeraj Singh, Advocate
For the Respondent: A.S.G.I., Ashwani Kumar Singh,C.S.C., Dipak Seth
The court reaffirmed that under Section 75(4) of the U.P. GST Act, 2017, a mandatory opportunity of hearing must be provided before imposing tax and penalties.
Headnote:(A) U.P. GST Act, 2017 - Section 75(4) - Writ petitions challenging orders and show cause notices regarding tax and penalty - Petitioners contended that they were not given an opportunity of hearing as mandated by law - Court held that marking 'NO' for hearing does not absolve the department from providing a hearing - Orders quashed for lack of due process. (Paras 4, 7, 8)
(B) Right to Fair Hearing - The principle of natural justice mandates that an opportunity of hearing must be provided before imposing penalties or adverse decisions against individuals. (Paras 4, 7)
Facts of the case:
Petitioners challenged multiple orders and show cause notices issued by the tax authority, asserting that they were denied a hearing prior to the imposition of tax and penalty. The petitioners mistakenly marked 'NO' for a hearing opportunity due to a technical glitch.
Findings of Court:
The court found that the department failed to provide a mandatory opportunity of hearing as required under Section 75(4) of the U.P. GST Act, 2017, leading to the quashing of the impugned orders.
Issues: The main issue was whether the petitioners were entitled to a hearing before the imposition of tax and penalty, given the circumstances of their case.
Ratio Decidendi: The court emphasized that the department must adhere to the procedural requirement of providing a hearing when adverse decisions are contemplated, and that a mere technical error by the petitioners does not negate this requirement.
Result: Writ petitions allowed; orders quashed.
JUDGMENT
Heard Sri Avinash Poddar assisted by Sri Neeraj Singh, learned counsel for petitioners, Sri Ashwani Kumar Singh, learned counsel for respondent no.1, learned Standing Counsel for the State and Sri Dipak Seth, learned counsel for respondent nos.2 and 5 in all the petitions.
2. These are four writ petitions with regard to Financial Year 2020-21, 2022-23, 2021-22 and 2019-20 respectively. Petitioners have approached this Court challenging the orders dated 09.10.2023, 12.10.2023, 11.10.2023 and 12.10.2023 as well as show cause notices dated 14.9.2023, 14.9.2023, 14.9.2023 and 13.9.2023 issued by respondent no.4 in all four writ petitions respectively.
3. The said show cause notices were given asking the petitioners to show cause as to why tax and penalty be not imposed upon them. The date fixed in the show cause notice issued to the petitioners was 22.9.2023, 22.9.2023, 13.10.2023 and 13.10.2023 respectively in all four writ petitions. The petitioners had submitted their reply on 21.9.2023, 21.9.2023, 07.10.2023 and 07.10.2023 respectively. However, it appears that by mistake they marked as "NO" for opportunity of hearing. Learned counsel for petitioners submits that the same got marked due to some technical glitch/mistake on the portal.
4. Be that as it may, learned counsel for petitioners further submits that Section 75(4) of the U.P. GST Act, 2017 mandatorily requires an opportunity of hearing to be given to the petitioners. He further submits that the orders are passed a day prior to the date fixed for hearing. Thus, learned counsel for petitioners states that petitioners have not been given any opportunity of hearing and in fact, the authority did not even wait till the date, for which notice was given to the petitioners. Learned counsel for petitioners further relies upon a judgment dated 3.5.2023 passed by a Division Bench of this Court in Writ Tax No.551 of 2023 "M/s. Mohini Traders v. State of U.P. and another", which again relies upon a judgment of this Court in Bharat Mint & Allied Chemicals v. Commissioner, Commercial Tax & others (2022) 48 VLJ 325.
5. Section 75(4) of the U.P. GST Act, 2017 reads as under:
"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."
6. Section 75(4) of the Act of 2017 specifically states 'or where any adverse decision is contemplated against such person'.
7. 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. This Court has already taken a similar view in M/s. Mohini Traders (supra).
8. In view thereof, all the writ petitions are allowed on the sole ground of opportunity of hearing and the orders impugned in all four writ petitions are quashed.
9. It shall be open for the department to give a fresh opportunity of hearing to the petitioners on the reply already submitted by the petitioners to the show cause notice and pass a fresh order in accordance with law. The petitioners shall fully cooperate in expeditious disposal of the case.
10. All other questions raised in the writ petitions are left open to be decided at the appropriate stage.
