Assessee writing ‘No’ to mark choice of personal hearing, have no legal consequence

Petitioner signifying ‘No’ in prescribed column to mark his choice to avail personal hearing, have no legal consequence. Opportunity of personal hearing mandatory u/s 75(4) of UPGST Act- – Allahabad High Court

In a recent judgment, Hon’ble Allahabad High Court has reiterated the principle of law that a person/assessee is not required to request for “opportunity of personal hearing” and it remained mandatory u/s 75(4) of UPGST Act 2017 upon the Assessing Authority to afford such opportunity before passing an adverse order.

ABCAUS Case Law Citation:
ABCAUS 4003 (2024) (05) HC

Important Case Laws relied upon:
Bharat Mint & Allied Chemicals Vs. Commissioner Commercial Tax & 2 Ors., (2022) 48 VLJ 325
M/s Hitech Sweet Water Technologies Pvt. Ltd. Vs. State of Gujarat, 2022 UPTC (Vol. 112) 1760

The Petitioner assessee had challenged the order passed under section 73 of UPGST Act 2017 (the Act) by the Assistant Commissioner, UPGST.

The case of the Petitioner was that the only one notice in the proceedings was issued to the petitioner seeking his reply within 30 days. As per the table appended to that notice, the Assessing Authority had at that stage itself chosen to not give any opportunity of personal hearing to the petitioner by mentioning “NA” against column description “Date of personal hearing”. Similar endorsements were made against the columns for “Time of personal hearing” and “Venue where personal hearing will be held”.

Thus, it was the objection that the petitioner was completely denied opportunity of oral hearing before the Assessing Authority.

Relying on Section 75(4) of the Act as interpreted by a coordinate bench of the Hon’ble High Court it was asserted, the Assessing Authority was bound to afford opportunity of personal hearing to the petitioner before he may have passed an adverse assessment order. Insofar as the assessment order has raised disputed demand of tax the same was wholly adverse to the petitioner.

In absence of opportunity of hearing afforded, the same was contrary to the law declared by this Court Reliance has also been placed on a decision of the Gujarat High Court.

On the other hand, the revenue contended, that the petitioner was denied opportunity of hearing because he had tick marked the option ‘No’ against the option for personal hearing (in the reply to the show-cause-notice), submitted through online mode. Having thus declined the opportunity of hearing, the petitioner cannot turn around to claim any error in the impugned order passed consequently.

The Hon’ble High Court observed that Section 75(4) of the Act 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.”

The Hon’ble High Court expressed complete agreement with the view taken by the coordinate bench. It stated that once it has been laid down by way of a principle of law that a person/assessee is not required to request for “opportunity of personal hearing” and it remained mandatory upon the Assessing Authority to afford such opportunity before passing an adverse order.

Further the Hon’ble High Court stated that the fact that the petitioner may have signified ‘No’ in the column meant to mark the assessee’s choice to avail personal hearing, would bear no legal consequence.

The Hon’ble High Court further observed that even otherwise in the context of an assessment order creating heavy civil liability, observing such minimal opportunity of hearing is a must. Principle of natural justice would commend to High Court to bind the authorities to always ensure to provide such opportunity of hearing. It has to be ensured that such opportunity is granted in real terms.

It was noted that the impugned order itself had been passed on after one month since reply to the show-cause-notice was filed. The Hon’ble High Court opined that the stand of the assessee may remain unclear unless minimal opportunity of hearing is first granted. Only thereafter, the explanation furnished may be rejected and demand created.
Not only such opportunity would ensure observance of rules of natural of justice but it would allow the authority to pass appropriate and reasoned order as may serve the interest of justice and allow a better appreciation to arise at the next/appeal stage, if required.

Accordingly, writ petition was allowed. The impugned order was set aside. The matter was remitted to the Assistant Commissioner to issue a fresh notice to the petitioner within a period of two weeks.

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