LI Network
Published on: 28 January, 2024 at 00:30 IST
In a recent ruling, the Lucknow Bench of the Allahabad High Court underscored the necessity of providing an opportunity for a hearing under Section 75(4) of the Uttar Pradesh Goods and Service Tax Act, 2017 (UPGST Act) before issuing any adverse order, including the imposition of tax or penalty.
The case involved a petitioner who had received show cause notices prompting it to justify why tax and penalty should not be levied. Although the petitioner responded to the notice, an inadvertent error marked “NO” for the opportunity of hearing. Subsequently, the authorities proceeded to pass orders imposing tax and penalty on the petitioner.
The petitioner’s counsel argued that the error was due to a technical glitch on the portal and stressed the mandatory nature of Section 75(4), which requires the grant of an opportunity for a hearing if requested in writing or when contemplating adverse action.
The bench, presided over by Justice Vivek Chaudhary and Justice Om Prakash Shukla, observed that Section 75(4) explicitly includes the phrase ‘or where any adverse decision is contemplated against such person.’
Since both tax and penalty were imposed on the petitioner, an adverse decision was undeniably contemplated. The court held that the department was obligated to provide an opportunity for a hearing, and the mere marking of “NO” by the petitioner should not justify passing an order without allowing the petitioner to present their case.
The bench cited a similar precedent from a coordinate bench in M/s. Mohini Traders vs. State of U.P. and another to support its decision. Consequently, the court quashed the orders and granted the department the liberty to proceed afresh, starting from the stage of providing the opportunity for a hearing to the petitioner.
Case Title: M/S Primeone Work Force Pvt. Ltd. Thru. Its Auth. Signatory Alok Kumar v. Union Of India Thru. Secy. Ministry Of Finance (Deptt. Of Revenue) New Delhi And Others [WRIT TAX No. – 4 of 2024]