The Allahabad High Court has issued a stern warning to the Commissioner of Commercial Tax in Uttar Pradesh, stating that Goods and Services Tax (GST) officials who deny taxpayers the opportunity to be heard will face disciplinary action and significant penalties. This warning highlights the court’s emphasis on upholding the principles of natural justice.

Case Background

The case arose from a challenge to an order dated August 19, 2021, issued by the Deputy Commissioner of the Commercial Tax Department in Sikandrabad, Bulandshahar, under Section 74(9) of the Central Goods and Services Tax Act, 2017 (the Act).

The learned Additional Chief Standing Counsel initially raised a preliminary objection, noting that there was an available remedy of appeal under Section 107 of the Act. However, the petitioner’s counsel countered this objection by highlighting the violation of Section 75(4) of the Act, which mandates that an opportunity for a personal hearing must be provided to an assessee before any assessment or adjudication order is passed.

Court’s Findings

The court found it “strange and wholly unacceptable” that despite changes in substantive law, revenue authorities were neglecting the mandatory procedural requirement to offer a personal hearing. This oversight, the court noted, fundamentally infringes upon the principles of natural justice.

The record revealed that the adjudicating authority neither issued a notice to the petitioner to show cause or participate in an oral hearing, nor granted any opportunity for a personal hearing. The learned Additional Chief Standing Counsel acknowledged similar issues in other cases and informed the court that the Commissioner, Commercial Tax, Uttar Pradesh, had been notified. Consequently, the Commissioner issued Office Memo No. 1406 on November 12, 2024, highlighting:

  1. The absence of set dates and times for personal hearings.
  2. Incorrect scheduling of hearing dates in relation to Show Cause Notice (SCN) reply deadlines.
  3. Discrepancies between order dates and personal hearing dates.

Court’s Directive

Given these facts, the court emphasized that before any adverse order is passed in adjudication proceedings, a personal hearing must be offered to the noticee. If the noticee waives this right, the adjudicating authority may proceed ex-parte. However, barring such exceptions, denying a personal hearing in adjudication proceedings is unacceptable.

The court declared the impugned order unsustainable in law due to gross violations of natural justice principles. It noted that applying the self-imposed bar of an alternative remedy would be counterproductive to justice since the appeal authority lacks the power to remand proceedings.

The writ petition was disposed of with the following directives:

  1. The impugned order dated August 19, 2021, by the Deputy Commissioner, Commercial Tax Department, Sikandrabad, Bulandshahar, is set aside.
  2. The matter is remitted to the Deputy Commissioner, Commercial Tax Department, Sikandrabad, Bulandshahar, for a fresh order in accordance with the law, after affording the petitioner a due opportunity for a hearing.

While the court considered imposing heavy costs on the respondent for the conduct displayed, it was assured by the learned Additional Chief Standing Counsel that such occurrences would not be repeated in the future. Consequently, the court directed the Commissioner, Commercial Tax, Uttar Pradesh, to implement remedial measures, including disciplinary proceedings against erring officials who violate fundamental principles of natural justice without justifiable reasons.