The Allahabad High Court has charged Rs. 20,000 on the SGST Joint Commissioner, Ghaziabad, who had issued a GST SCN without fixing the date and time for a personal hearing.
Additionally, the commissioner passed an order under Section 74 of the Goods and Services Tax Act, 2017, demanding more than Rs. 5 crore, while neglecting the taxpayer’s explicit request for a personal hearing.
As per section 75(4), when requested in writing, the taxpayer is required to be provided a chance of personal hearing where the taxpayer is levied to tax/ penalty or where any adverse action is contemplated against him.
The two-member bench of Chief Justice Arun Bhansali & Justice Kshitij Shailendra ruled that
“Innumerable cases have come before this Court where show cause notices have been issued and ex-parte assessments made after the cancellation of the GST registration of the firm, based on uploading of notices on the portal, without ensuring personal service of the notices.”
“Such conduct of the officers in dealing with matters, besides resulting in huge loss of time on the part of the State Government, the same unnecessarily increases burden of this Court wherein numerous petitions every day, underlying violation of principles of natural justice, are being filed and as violations are so glaring, this Court is left with no option but to allow the petitions and remand back the matters to the authorities.”
U/s 74, the applicant was issued an SCN for the incorrect classification of goods via it. In SCN, in a column for date and time of personal hearing, NA was cited. The applicant in answer refused all charges and asked for a personal hearing. But without providing a chance of hearing, an order was passed.
The applicant’s counsel contested the order under section 74 of the Act based on the fact that it was obligatory for the authority to provide a chance of personal hearing to the applicant u/s 75(4), particularly when the request had been completed in writing for the same.
It was claimed that the order was in breach of the Circular dated 13.06.2024 furnished via the Additional Commissioner Law, Commercial Tax, U.P., which was issued as per the norms of the HC in Laskin Engineering Pvt. Ltd. Vs. State of U.P. and Another concerning the chance of a personal hearing.
The Court noted that the department’s Standing Counsel produced the department’s guidelines, where no justification had been provided for not following the obligatory provision of the Act.
The High Court in Laskin Engineering Pvt. Ltd. Vs. State of U.P. and Another ruled that the applicant had been refused the chance of a personal hearing as per Section 75(4) of the Act. keeping that the obligatory provisions had not been complied with by the authority, the court took note of the Office Memo No. 1406 dated 12.11.2024 issued by the Commissioner, Commercial Tax, Uttar Pradesh which furnishes that in the column for date and time of personal hearing, it needs to be cited instead of NA; the SCN date and the date of filing the response need to before the date of personal hearing and order needs to be passed on the personal hearing date.
The court, in Laskin Engineering Pvt. Ltd., thus marked that there was a total breach of principles of natural justice, and the applicant cannot be relegated to revise the remedy, the court asked the commissioner, Commercial Tax, Uttar Pradesh to perform the remedial actions to prevent the breach of the principles of natural justice. The court, while parting, warned about a serious penalty for future breaches.
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To all Additional Commissioners, Commercial Taxes, an office memo was issued asking them to comply with the obligatory provisions of section 75(4) of the Act.
The bench led by Chief Justice Bhansali, noticing a significant number of petitions being filed daily for breach of natural justice principles, determined that the authorities were mechanically issuing orders without properly considering the relevant material available to them online, as all taxpayers’ data was accessible electronically.
It was ruled by the court that the authorities had not provided a chance of a personal hearing even after the request of the applicant in writing, which was a breach of principles of natural justice. As per that, the court set aside the order u/s 74 with a cost of Rs. 20,000, subject to be paid via the Joint Commissioner SGST, Corporate Circle-1, Ghaziabad, who had issued the show cause notice along with the impugned order.
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The Court has also ordered that proper training be provided to officers, as they are not adhering to the directives and circulars issued to them. It stated that disciplinary action, as outlined in the case of Laskin Engineering Pvt. Ltd., is to be taken against the officials who are at fault; otherwise, the State may face negative consequences.
| Case Title | Merino Industries Ltd. V/S State of Uttar Pradesh and another |
| Case No. | WRIT TAX No. – 1406 of 2025 |
| Counsel For Petitioner | Anil Prakash Mathur |
| Counsel For Respondent | Ankur Agarwal (S.C.) |
| Allahabad High Court | Read Order |
