Denial of Opportunity for Oral Hearing u/s 75(4) of GST Act: Allahabad HC sets aside Demand Order [Read Order]

The Allahabad High Court set aside a tax demand order against M/S Jain Medicals, citing the denial of an opportunity for an oral hearing as mandated under Section 75(4) of the U.P. GST Act, 2017.

M/s Jain Medicals filed a writ petition challenging an order dated 05.12.2023, issued by the Income Tax Department, raising a demand of Rs. 60,383.00/- for the tax period 2017-18.

Pranjal Shukla, counsel for the petitioner, contended that the petitioner was denied a mandatory oral hearing. A notice dated 02.09.2023, sought the petitioner’s reply within 30 days but marked “NA” in the columns for “Date of personal hearing,” “Time of personal hearing,” and “Venue where personal hearing will be held,” thus precluding any opportunity for a hearing.

The counsel cited the decision of the coordinate bench in Bharat Mint & Allied Chemicals vs. Commissioner Commercial Tax & 2 Ors., which established that the Assessing Authority must afford an opportunity for a personal hearing before issuing an adverse order.

Ankur Agarwal, counsel for the revenue, argued that the petitioner was denied opportunity of hearing because he had tick marked the option ‘No’ against the option for personal hearing in the online reply to the show-cause notice. Therefore, the petitioner could not later claim any error in the order.

The bench of Justices Saumitra Dayal Singh and Anish Kumar Gupta observed 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 court concurred with Bharat Mint & Allied Chemicals, emphasising that the Assessing Authority must provide an opportunity for a hearing before passing an adverse order, irrespective of the assessee’s request.

The court set aside the impugned order, and remitted the matter to the Assistant Commissioner of State Tax. A fresh notice is to be issued to the petitioner within two weeks.

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