Right To Hearing Must Be Granted Where Adverse Order Is Contemplated Against A Person U/S 75 (4) CGST Act: Allahabad HC

The Allahabad High Court has recently 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.

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 has 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 was further argued that the adverse material had not been confronted to Petitioner resulting in a most unfair trial and therefore, the order made was in gross disregard to Judicial Discipline and without meeting the mandate of Law as contained under Section 74(2) of the GST Act.

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.

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, the Court, at the outset, perused the show cause notice issued to the Petitioner dated November 9, 2021, and noted that in it, the date, time, and venue of personal hearing had not been mentioned.

Further, referring to Section 75(4) of the Act, the Court stressed that this provision is the reiteration of principles of natural justice, and further, it remarked thus:

"...it is evident that opportunity of hearing has to be granted by authorities under the Act 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, it prima facie, appears that where an adverse decision is contemplated against the person, such a person even need not to request for opportunity of hearing and it appears to be mandatory for the authority concerned to afford opportunity of hearing before passing an order adverse to such person."

In view of this, the Court asked the respondents as to whether the opportunity of hearing was afforded to the petitioner as contemplated in Section 75(4) of the Act and in the event, it had not been afforded, then the reasons therefor.

Lastly, as an interim measure, it was provided that no coercive action shall be taken against the petitioner pursuant to the demand created under the impugned order till the next date fixed.

Case title - Bharat Mint And Allied Chemicals v. Commissioner Commercial Tax And 2 Others

Click Here To Read/Download Order