Allahabad HC Rejects GST Demand Order Due to Missing Oral Hearing Opportunity U/S 75 for Assessee

A tax demand order against M/S Jain Medicals has been set aside by the Allahabad High Court quoting the refusal of a chance for an oral hearing as obligated Under Section 75(4) of the U.P. GST Act, 2017.

On 05.12.2023, M/s Jain Medicals filed a writ petition contesting an order issued via the income tax department asking for a demand of Rs 60,383 for the tax duration 2017-18.

The applicant’s counsel Pranjal Shukla, argued that the applicant was refused an obligatory oral hearing. On 02.09.2023 a notice asked for the response of the applicant 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,” therefore preventing any hearing chance.

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The decision of the coordinate bench has been quoted by the counsel in Bharat Mint & Allied Chemicals vs. Commissioner Commercial Tax & 2 Ors., which affirmed that the Assessing Authority must allow a personal hearing before issuing an adverse order.

The revenue counsel Ankur Agarwal claimed that the applicant was refused the chance of hearing as he already had tick marked the option ‘No’ against the option for personal hearing in the online reply to the show-cause notice. Consequently, the applicant cannot afterwards claim any error in the order.

The bench of Justices Saumitra Dayal Singh and Anish Kumar Gupta remarked, “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.”

With Bharat Mint & Allied Chemicals, the court concurred, stressing that the assessing authority should be required to furnish a chance of hearing before passing an adverse order, without considering the taxpayer’s appeal.

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The court set aside the impugned order and remitted the case to the Assistant Commissioner of State Tax. A new notice is to be issued before the applicant within 2 weeks.