Order Passed under GST against taxpayer without Personal hearing is Invalid : High Court
HIGH COURT OF ALLAHABAD
Bharat Mint and Allied Chemicals
v.
Commissioner of Commercial Tax
SURYA PRAKASH KESARWANI AND JAYANT BANERJI, JJ.
WRIT TAX NO. 1029 OF 2021
MARCH 4, 2022
Abhinav Mehrotra and Satya Vrata Mehrotra for the Petitioner. C.S.C. and A.S.G.I. for the Respondent.
ORDER
1. Heard Sri Abhinav Mehrotra, learned counsel for the petitioner and learned standing counsel for the State – respondents.
2. This writ petition has been filed praying for the following relief:
| “1. | The Hon’ble Court may be pleased to issue a writ, order or direction in the nature of CERTIORARI, calling for the Record of proceedings from Revenue and to thereafter be further pleased to set-aside and quash the IMPUGNED Order of Adjudication Dt. 9-11-2021 [ANNEXURE NO.7] and connected demand of tax which is made is gross violation of the principles of natural Justice; NO oral hearing in the matter was afforded to Petitioner, adverse material has not been confronted to Petitioner resulting in a most UNFAIR TRIAL. | |
| 2. | The Hon’ble Court may be pleased to issue a writ, order or direction in the nature of CERTIORARI to set aside and quash the IMPUGNED Order of Adjudication Dt. 9-11-2021 which is made is gross disregard to Judicial Discipline and without meeting the mandate of Law as contained under Section 74(2) of the GST Act. | |
| 3. | The Hon’ble Court may be pleased to issue a writ, order or direction in the nature of MANDAMUS commanding Revenue authorities to reconsider the case of the Petitioner, lawfully and in good-faith, in the light of submissions filed by Petitioner, and with supplying of relief upon documents and after affording due and proper opportunity of hearing.” |
Submissions
3. Learned counsel for the petitioner submits that the impugned assessment order creating demand of tax, interest and penalty, has been passed without affording opportunity of hearing contemplated in Section 75(4) of the Central Goods and Services Tax, 2017/ U.P. Goods and Services Tax, 2017 (hereinafter referred to as “the Act 2017”) and thus, the impugned order being patently in breach of principles of natural justice, is unsustainable and deserves to be quashed.
4. Learned standing counsel submits that the petitioner has an alternative remedy of appeal under Section 107 of the Act, 2017. Therefore, the writ petition is not maintainable.
Discussion & Findings
5. We have carefully considered the submissions of learned counsel for the parties.
Question
The two question involved in this writ petition are as under :-
| (i) | Whether opportunity of personal hearing is mandatory under Section 75(4) of the CGST/UPGST Act 2017 ? | |
| (ii) | Whether under the facts and circumstances of the case the impugned adjudication order has been passed in breach of principle of natural justice and consequently it deserves to be quashed in exercise of powers conferred under Article 226 of the Constitution of India ? |
6. We have perused the show cause notice dated -9-9-2021 in which it has been mentioned as under:
“You may appear before the undersigned for personal hearing either in person or through representative for representing your case on the date, time and venue, if mentioned in the table below.”
7. In the table below the aforementioned lines, date, time and venue of personal hearing has not been mentioned. Section 75(4) of the Act, 2017 provides that opportunity of personal 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.
8. Section 75(4) of the 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.”
9. From perusal of Section 75(4) of the Act, 2017 it is evident that 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 opportunity of hearing or where any adverse decision is contemplated against such person. Thus, where an adverse decision is contemplated against the person, such a person even need not to request for opportunity of personal hearing and it is mandatory for the authority concerned to afford opportunity of personal hearing before passing an order adverse to such person.
10. In the counter affidavit the respondents have taken the stand that no opportunity of hearing is required before passing the assessment order. In support of their contention the respondents have relied upon the judgment of Hon’ble Supreme Court in Union of India and Others v. M/s. Jesus Sales Corporation AIR 1996 SC 1509. Perusal of the judgment in the case of M/s. Jesus Sales Corporation (supra) shows that the observation was made by Hon’ble Supreme Court while interpreting 3rd proviso to Section 4 M(1) of the Imports and Exports (Control) Act 1947, which is reproduced below :
“Provided also that, where the Appellate authority is of opinion that the deposit to be made will cause undue hardship to the appellant, it may, at its discretion, dispense with such deposit either unconditionally or subject to such conditions as it may impose.”
11. The aforequoted 3rd proviso of Section 4 M (1) of the Act 1947 does not contemplate any opportunity of personal hearing in contrast to the provisions of Section 75(4) of the CGST/UPGST Act, 2017 which specifically mandates for opportunity of hearing before passing the order. The counter affidavit has been filed by an Officer of the rank of Joint Commissioner, Corporate Circle Commercial Tax, Bareilly who has either not read the aforesaid judgment of Hon’ble Supreme Court or was not able to understand it and in a casual manner the counter affidavit has been filed in complete disregard to the statutory mandate of Section 75(4) of the Act 2017.
12. It has also been admitted in the counter affidavit that except permitting the petitioner to reply to the show cause notice, opportunity of personal hearing has not been afforded to the petitioner. Thus 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, has been completely violated by the respondents while passing the impugned order.
13. The stand taken by 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, can also not be accepted inasmuch as 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. 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 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.
14. During the course of hearing of this writ petition, learned standing counsel has produced before us a photo stat copy of the order of the Assessing Authority relating to the impugned order and perusal thereof shows that no opportunity of hearing as contemplated under Section 75(4) of the Act, 2017 was not afforded to the petitioner. Thus, there being patent breach of principles of natural justice, the present writ petition is maintainable against the impugned order.
15. Article 226 of the Constitution of India confers very vide powers on High Courts to issue writs but this power is discretionary and the High Court may refuse to exercise the discretion if it is satisfied that the aggrieved person has adequate or suitable remedy elsewhere. It is a rule of discretion and not rule of compulsion or the rule of law. Even though there may be an alternative remedy, yet the High Court may entertain a writ petition depending upon facts of each case. It is neither possible nor desirable to lay down inflexible rule to be applied rigidly for entertaining a writ petition. Some exceptions to the rule of alternative remedy as settled by Hon’ble Supreme Court are as under:-
| (i) | Where there is complete lack of jurisdiction in the officer or authority to take the action or to pass the order impugned. | |
| (ii) | Where vires of an Act, Rules, Notification or any of its provisions has been challenged. | |
| (iii) | Where an order prejudicial to the writ petitioner has been passed in total violation of principles of natural justice. | |
| (iv) | Where enforcement of any fundamental right is sought by the petitioner. | |
| (v) | Where procedure required for decision has not been adopted. | |
| (vi) | Where Tax is levied without authority of law. | |
| (vii) | Where decision is an abuse of process of law. | |
| (viii) | Where palpable injustice shall be caused to the petitioner, if he is forced to adopt remedies under the statute for enforcement of any fundamental rights guaranteed under the Constitution of India. | |
| (ix) | Where a decision or policy decision has already been taken by the Government rendering the remedy of appeal to be an empty formality or futile attempt. | |
| (x) | Where there is no factual dispute but merely a pure question of law or interpretation is involved. | |
| (xi) | Where show cause notice has been issued with preconceived or premeditated or closed mind. |
16. The above principles are supported by the law laid down by Hon’ble Supreme Court in the case of Himmatlal Harilal Mehta v. State of Madhya Pradesh, AIR 1954 SC 403, Collector of Customs v. Ramchand Sobhraj Wadhwani, AIR 1961 SC 1506, Collector Of Customs & Excise ,Cochin & Ors. v. A. S. Bava, AIR 1968 SC 13, Dr. Smt. Kuntesh Gupta v. Management Of Hindu Kanya Mahavidyalaya, L.K. Verma v. HMT Ltd. and anr., [2006] 2 SCC 269, Paras 13 and 20, M.P. State Agro Industries Development Corpn. Ltd. & Anr. vs. Jahan Khan (2007) 10 SCC 88 para 12, Dhampur Sugar Mills Ltd. v. State of U.P. and others [2007] 8 SCC 338, BCPP Mazdoor Sangh v. NTPC [2007] 14 SCC 234 (para 19), Rajasthan State Electricity Board v. Union of India, [2008] 5 SCC 632 (para 3), Mumtaz Post Graduate Degree College v. University of Lucknow, [2009] 2 SCC 630 (para 22 and 23), Godrej Sara Lee Limited v. Assistant Commissioner (AA), (2009) 14 SCC 338. 14, Union of India v. Mangal Textile Mills (I)(P) Ltd., [2010] 14 SCC 553 (paras 6,7,10 and 12), Union of India v. Tantia Construction (P) Ltd., [2011] 5 SCC 697, Southern Electricity Supply Co. of Orissa Ltd. v. Sri Seetaram Rice Mill, [2012] 2 SCC 108 (paras 79,80,81,82,86,87 and 88), State of M.P. v. Sanjay Nagaich [2013] 7 SCC 25 (para 34,35,38,39), State of H.P. vs. Gujarat Ambuja Cement Ltd., (2005) 6 SCC 499 (para 11 to 19), Star Paper Mills Ltd. v. State of U.P. and others, JT [2006] 12 SC 92, State of Tripura vs. Manoranjan Chakraborty, (2001) 10 SCC 740 para 4; Paradip Port Trust v. Sales Tax Officer and Ors. [1998] 4 SCC 90, Feldohf Auto & Gas Industries Ltd. v. Union of India [1998] 9 SCC 710; Isha Beebi v. Tax Recovery Officer [1976] 1 SCC 70 (para 5); Whirlpool Corporation v. Registrar of Trademarks [1998] 8 SCC 1; Guruvayur Devasworn Managing Committee Vs C.K. Rajan (2003) 7 SCC 546 (para 67, 68), Oryx Fisheries Pvt. Ltd. v. Union of India & Others [2010]13 SCC 427 (Paras 27 to 38), Mangilal v. State of M.P. [1994] 4 SCC 564 (Para 6), Siemens Ltd. VS. State of Maharashtra (2006) 12 SCC 33 (para 9 & 11), Kaikhosrou (Chick) Kavasji Framji of Indian Inhabitant v. Union of India [2019] 20 SCC 705 (para 59) and judgments of this Court in Writ Tax No. 255 of 2012 (M/s Shree Bhawani Paper Mills Ltd. v. State Of U.P. and Another) decided on 10.09.2015, M/s. Rapti Commissions Agency v. Union of India [2010] 1 AllLJ. 710 :(2009) 244 ELT 8 and Oudh Sugar Mill v. State of U.P. (2015) 3 AllLJ 774 (para 27).
17. For all the reasons aforestated, 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 is hereby quashed.
18. Liberty is granted to the respondents to pass an order afresh in accordance with law, after affording opportunity of personal hearing to the petitioner.
19. Writ petition is allowed to the extent indicated above with cost of Rs.10,000/-.
20. A copy of this order be sent by the Registrar General of this Court to the Commissioner, Commercial Tax U.P. Lucknow who shall ensure that principles of natural justice as contemplated under Section 75(4) of the CGST/UPGST Act 2017 be followed by Proper Officers/Assessing Authorities in the State of Uttar Pradesh.
Order Date :- 4-3-2022